UK manufacturers see output and orders growth pick up in recent months, but look to pass on raw material costs.
According to the CBI's January Quarterly Industrial trades Survey, manufacturers expect another solid rise in production during the next quarter. However, prices for finished goods rose markedly and an even faster increase is predicted over the next quarter, as firms look set to pass on higher raw material costs.

Of the 394 manufacturers that responded to the survey, 32% reported an increase in output over the past three months, while 16% said it had fallen, giving a balance f 16%, compared with 9% in October. This figure was driven by growth in export orders, while domestic demand rose more modestly. According to the CBI, however, domestic demand growth was still stronger than was originally anticipated in October.

Into the next quarter, output is expected to grow at a similar pace again, up 17%, driven primarily by another strong rise in export orders. Domestic orders are expected to be broadly flat, at -3%.

The survey revealed that manufacturers raised output prices markedly during the last quarter, with both average domestic and export prices increasing at the fastest pace since October 2008. Looking to the coming three months, price increases are expected to accelerate sharply, with a balance of 31% of firms predicting an increase in domestic prices and 34% a rise in export prices.

This acceleration in output prices reflects the fourth successive quarterly rise in average unit costs, with cost pressures also expected to continue to rise at a similar pace over the next three months.