According to the latest CBI Quarterly Industrial Trends Survey, manufacturing production and order books showed signs of stabilising in the three months to January, but there are limited signs of a recovery in exports.
Both domestic and export new orders were almost flat, but were an improvement on the previous quarter when orders fell. 23% of businesses reported an increase in total new order books and 27% a decrease, giving a balance of -4%.
Manufacturers do expect some growth in domestic new orders and output over the next quarter, but export new orders are expected to remain flat and optimism about the overall business situation declined a little further, according to the 465 firms surveyed.
Total unit costs and domestic prices both fell back slightly over the three months to January. Competitiveness abroad for manufacturers remains under intense pressure, with 16 of 18 sub-sectors saying that their competitiveness in the EU was down on three months ago. Export output prices continue to post falls, with firms’ competitiveness outside the EU also continuing to worsen.
Investment intentions have improved though, and firms plan to invest more in training and product innovation over the next 12 months.
CBI director of economics, Rain Newton-Smith, said: “Manufacturers have seen a flat start to 2016 but while we have seen real problems in some industries in the last few months, there are signs that orders and production are stabilising overall.
“Uncertainty around the prospects for global growth, uncompetitive energy costs and the strength of the pound have all played their part in UK manufacturers finding conditions tough when trying to sell overseas.
“Over the longer term, strong investment in innovation and skills is vital to boosting our performance in exports, so it’s great to see firms planning to invest more in training and products over the next year.”