The CBI has published its latest Industrial Trends Survey for the three months up to July, with it showing that UK manufacturers are reporting improving sentiment for the first time in years.
Output volumes also appear to have turned a corner after gradually falling in the survey in February. They stabilised in the last quarter and are predicted to return to growth in the current quarter.
The situation remains challenging for manufacturers, however, as they continue to face pressure on margins. The rise in unit costs accelerated, while growth in domestic retail prices eased off. The intention to invest was also generally weaker, with more firms voicing concerns about the cost of finance.
The lead economist at the CBI, Ben Jones, said that while manufacturers had cause to be optimistic this quarter:
“…the overall picture is still subdued. Output has stopped falling, supply chains continue to recover and concerns over labour shortages have eased a little. But cost pressures remain acute and there are worrying signs that a squeeze on margins and higher finance costs are now hitting investment plans.”
He added that with investment in manufacturing facing a challenging environment, it will help to build confidence in the sector, such as by providing more clarity about how the UK will respond to interventions like the US Inflation Reduction Act.
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