UK manufacturers more optimistic despite dip in orders, CBI survey shows

London: Optimism among British manufacturers rose to its highest since July 2021 this month, despite a drop in orders, the Confederation of British Industry said on Wednesday.

The CBI’s quarterly business optimism gauge rose sharply to its highest in nearly three years at +9, up from -3 in January and well above its long-run average of -7. A monthly measure of output expectations rose to a six-month high.

“Conditions facing manufacturers have taken a turn for the better, with sentiment improving and expectations for future output growth their strongest in six months,” CBI deputy chief economist Anna Leach said.

A softer labour market had eased concerns about skills shortages while concerns about access to materials and components were the lowest since January 2020, she added.

The CBI’s monthly industrial orders balance fell to -23 in April from -18 in March, below economists’ forecasts in a poll for a slight improvement to -16 and well beneath the survey’s long-run average of -13.

Rob Wood, chief UK economist at Pantheon Macroeconomics, said April’s fall in orders was probably a seasonal effect and he pointed to a pick up in investment intentions since January.

“Declining uncertainty about the economic outlook and slightly lower borrowing costs have helped to lift spirits,” he said.

Price pressures continued to pick up, though with the monthly survey showing a rise to +27 in April from +21 in March, the highest since February 2023.

The increase echoed a similar rise in April’s purchasing managers’ index data as a 10% rise in Britain’s minimum wage took effect this month and businesses also reported higher costs for transport and raw materials.