According to the latest CBI Industrial Trends Survey, activity in the UK manufacturing sector remained solid in May 2014, and output is expected to rise strongly in the next three months. Output volumes continued to grow at the same rate as in the previous two months, and with stronger growth anticipated for the coming quarter.

The survey of 437 manufacturers found that total order books remained well above the long-run average. Export orders fell below normal, mainly driven by the chemicals and automotive sectors, but remained strong by historical standards.  The sales statistics that UK Automation Trade Association Gambica collects from its member companies paint a healthy picture of the state of the UK’s automation and related sectors including variable speed drives and PLCs.

According to Gambica, while the economy has generally been relatively flat in recent years, the automation market has been growing year-on-year, both globally and in the UK. While the general mood is one of cutbacks and caution, the smart money is being invested in technology and equipment to boost the competitive position of UK industry and to drive growth.

The annual Gambica index provides a reliable indicator of the trends in revenues being generated by UK companies operating in the instrumentation, control, automation and laboratory technology  sectors. It tracks the sales of products and services for three distinct sectors – process control, industrial automation, and laboratory technology – using levels in 2006 as a reference

In their report, the CBI comment that overall, the manufacturing sector continues to perform well. Output growth is on an upward trend, with firms expecting an even stronger rise in the next three months.  Inflationary pressures are under control, with firms now expecting only a slight rise in the selling prices of their goods.

Caution on strength of Sterling

The recent rise in Sterling, coupled with a tepid recovery in the Eurozone could weigh on export demand. As the UK’s economic recovery gains a firmer footing, we need to ramp up manufacturing exports to high-growth markets, driving job creation here in the UK.”

Key findings

36% of firms said the volume of output over the last three months was up and 21% said it was down, giving a balance of +15% for the third consecutive month. This was well above average (+2%)

Firms expect output to grow in the coming quarter, with 39% predicting growth, and 7% a decline, giving an overall balance of +32%. This is unchanged since April and, if realised, would be the highest balance since September (+33%)

22% of firms reported that total order books were above normal and 22% said they were below normal, giving a balance of 0%. This was similar to that in April (-1%) and well above the long-run average (-16%)

19% of firms said their export order books were above normal and 28% said they were below normal, giving a rounded balance of -9%

Output price expectations moderated (+4%), compared with April (+9%)

16% of firms said their present stocks of finished goods were more than adequate, and 8% reported they were less than adequate, giving a balance of +8%.

More about Gambica and what they do here

CBI quarterly trends survey