Activity in the UK manufacturing sector remained solid in May, and output is expected to rise strongly in the next three months, the latest CBI Industrial Trends Survey shows.

Output volumes continued to grow at the same rate as in the previous two months, and with stronger growth anticipated for the coming quarter.

The survey of 437 manufacturers found that total order books remained well above the long-run average. Export orders fell below normal, mainly driven by the chemicals and automotive sectors, but remained strong by historical standards.

Katja Hall, CBI Deputy Director-General, said:

Overall, the manufacturing sector continues to perform well. Output growth is on an upward trend, with firms expecting an even stronger rise in the next three months.

Inflationary pressures are under control, with firms now expecting only a slight rise in the selling prices of their goods.

The recent rise in Sterling, coupled with a tepid recovery in the Eurozone could weigh on export demand. As the UK’s economic recovery gains a firmer footing, we need to ramp up manufacturing exports to high-growth markets, driving job creation here in the UK.

Key findings of the Survey

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• 36% of firms said the volume of output over the last three months was up and 21% said it was down, giving a balance of +15% for the third consecutive month. This was well above average (+2%)

• Firms expect output to grow in the coming quarter, with 39% predicting growth, and 7% a decline, giving an overall balance of +32%. This is unchanged since April and, if realised, would be the highest balance since September (+33%)

• 22% of firms reported that total order books were above normal and 22% said they were below normal, giving a balance of 0%. This was similar to that in April (-1%) and well above the long-run average (-16%)

• 19% of firms said their export order books were above normal and 28% said they were below normal, giving a rounded balance of -9%

• Output price expectations moderated (+4%), compared with April (+9%)

• 16% of firms said their present stocks of finished goods were more than adequate, and 8% reported they were less than adequate, giving a balance of +8%.

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