Manufacturing orders pick up in august after hitting two-year low

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Activity in Britain’s manufacturing sector rebounded in August with orders improving from a two-year low the previous month, according to a survey.

The latest CBI Industrial Trends Survey showed the balance of firms with bigger total order books compared to those with smaller order books fell to minus one in August.

This is a pick-up from a balance of minus 10 in July, which was the weakest level since July 2013.

The survey also found that just over half of the 18 manufacturing sectors the report covers reported an improvement in export sales.

The balance of firms who said that export orders were above average is minus eight, which is above last month’s minus 17, and the long-term average of minus 20.

It said export increases were registered by food and drink, chemicals and the pharmaceuticals sectors.

But in eight other manufacturing sectors, such as metal production exports, orders remained below average.

Looking over a longer period, the firms that reported growth in the three months to August posted a balance of plus 14, with plus 14 of firms also saying they expect output to grow at a similar pace over the next quarter.

However, manufacturers expect average prices to fall in the next three months after being flat last quarter, pointing to further pressure on margins.

CBI director of economics Rain Newton-Smith said: “While the rebound in manufacturers’ total order books is encouraging, many firms are still struggling in overseas markets.

“On the one hand, the strength of sterling and cheaper energy are reducing factory input costs, but the strong pound is also hitting export prices and margins hard.”