UK manufacturers are increasingly optimistic for the year ahead, boosted by a strong growth in domestic sales and export opportunities.

According to the findings of the latest quarterly trends survey from the CBI, the value of domestic orders rose at the fastest pace since July 2014 in the three months to January 2017. Export orders also grew, in the same period albeit at a slightly lesser rate than expected.

The CBI says demand is expected to grow strongly over the next three months, driven by both domestic and export orders, while production is also expected to advance briskly – expectations for output growth are also the highest since July 2014.

Sterling’s depreciation continues to impact prices as unit costs rose at their highest pace in over five years, amid expectations that this will intensify over the next quarter. On the flip side, manufacturers continue to see the competitive benefits arising from sterling’s weakness, reporting a further strong rise in competitiveness within the EU and putting the rise in competitiveness in non-EU markets at a survey high.

The pick-up in output has, meanwhile, eaten into spare capacity, pushing the proportion of firms citing capacity expansion as an investment driver to a survey high. Firms are planning to increase investment in product and process innovation and training and retraining over the year ahead at the fastest pace in two years, while investment plans for building and plant and machinery have moved back above their long-run averages.

“UK manufacturers are firing on all cylinders right now with domestic orders up and optimism rising at the fastest pace in two years,” Rain Newton-Smith, CBI Chief Economist. “The weaker Pound is driving export optimism for the year ahead, but is having a detrimental impact on costs for firms and ultimately for consumers,” she added.

Concerns also persist over access to skilled labour, with almost a quarter of respondents – the highest since July 1989 – observing that skilled labour availability could limit output over the next few months.

Source: http://www.britishplastics.co.uk/News/optimism-amongst-uk-manufacturers-high-as-domestic-orders-fl/