Manufacturing grows at fastest rate in two decades

The latest Confederation of British Industry (CBI) industrial trends survey showed that 43% of firms saw output volume grow in the three months to July, compared to 12% which reported a drop, giving a balance of 31%.

That was the highest balance for output on record in over 22 years.

CBI chief economist Rain Newton-Smith said: “Output growth among UK manufacturers is the highest we’ve seen since the mid-90s, prompting the strongest hiring spree we’ve seen in the last three years.”

The poll - which surveyed 397 businesses - found that 32% hired extra workers over the past three months, while only 13% saw headcounts drop, leading to a balance of 18% which is the highest level since July 2014 when the survey recorded a balance of 26%.

The survey also highlighted a drop in input cost pressures, with only a balance of 20% reporting a rise in unit costs in the last three months, compared with 45% in the three months to April.

That trend is expected to continue, with a balance of 5% of businesses predicting a rise in unit costs going forward, versus 41% in the previous quarter.

Companies also expect factory gate price inflation to be “more subdued”.

A brighter outlook among manufacturers is prompting further investments in worker training, which is forecast to increase at the strongest rate since January 2015.

A balance of 28% of firms are forecasting a jump in output volume over the next three months, compared to 16% back in April.

Expectations for both domestic orders are now the most upbeat since April 2015, while the expected growth in export orders - at a balance of 28% - is at its highest level in 40 years.