U.K. manufacturing activity continued to grow at a steady pace in the three months to February on the back of strong external demand and a relatively low valuation of the pound, the Confederation of British Industry said in its latest monthly Industrial Trends Survey.
Manufacturing output grew in 16 out of 17 sub-sectors, supported by the food, drink and tobacco, and motor vehicle and transport equipment sub-sectors. Survey participants expected output growth to slow over the next three months.
The monthly total order books balance was at positive 10%, above the long-run average of negative 14%. The balance for export order books also stood at positive 10%, well above the long run average of negative 18%.
Expectations for output price inflation declined from the 34-year-high reading in December but remained above the historical average.
"This month saw another strong showing from U.K. manufacturers. Although order books weren't quite as buoyant as they were last month, demand remains strong and output grew briskly," said Anna Leach, CBI Head of Economic Intelligence. "With the Brexit negotiations reaching a critical juncture, many businesses are concerned about future barriers to trade and are looking for clarity over the future relationship with the EU. Remaining in a comprehensive customs union will help alleviate some of those fears and give firms the confidence to invest and grow," she added.
"Manufacturers are benefiting from the health of the global market place. But companies still struggle to find the workers they need to grow their business. To ensure there's a strong pipeline of people with the technical skills needed, we need young people to receive further education and careers advice built upon the needs of employers," said Tom Crotty, group director of Ineos and chair of the CBI Manufacturing Council.
The CBI also said that it expects consumer-centric companies and retailers to struggle as wages remain under pressure from higher inflation.