Manufacturers’ confidence hits 22-year high

Optimism among the UK’s manufacturing firms has reached the highest level for more than 20 years.

Figures released earlier this week reveal that the fall in the value of the Sterling has boosted exports and led to a surge in confidence in the sector.

A survey of more than 400 businesses, conducted by the Confederation of British Industry (CBI), showed that more than four in ten manufacturers were hopeful that output would rise during the next three months. By comparison, just ten per cent of those surveyed feared it would fall.

The gap between the two groups has not been this large since February 1995 – when John Major was Prime Minister, Bill Clinton was in the White House and the Chancellor was poised to cut the basic rate of income tax to 24p.

The CBI analysis also revealed that factory output has climbed to its highest level since 2014 and export orders have reached a quantity not seen since the end of 2013.

Anne Leach, head of economic intelligence at the business body, said: “It’s been a strong month for UK manufacturers, with production growing robustly and overseas demand on the up.

“The past fall in the pound seems finally to be helping lift demand for UK manufactured exports, which rose at one of the fastest paces in this survey’s history.”

Howard Archer, chief UK and European economist at IHS Markit, said: “The UK manufacturing sector had a healthy first quarter of 2017 after an improved end to 2016.

“The manufacturing sector also looks well placed overall for the second quarter. The sharp weakening of the pound appears to be feeding through to help UK exporters competing in foreign markets.”

But he cautioned against over-confidence, warning that currency fluctuations would also lead to a rise in prices and could ultimately squeeze companies’ profit margins.

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