Scotland’s manufacturers have reported that output has risen robustly but cost pressures continue to push up prices, according to the latest quarterly CBI Industrial Trends Survey.
The survey of 33 manufacturers revealed that growth in both domestic and export orders slowed, though remained strong by historical comparison. Expectations for the next three months are upbeat, with manufacturers anticipating stronger domestic orders growth and another firm rise in export orders.
Output growth strengthened, and firms expanded headcount at the fastest pace since July 2014. Near-term expectations for activity remain firm, with production expected to continue to grow, albeit at a slower pace, and hiring intentions close to a three-year high. Nevertheless, sterling’s weakness continues to stoke pricing pressures, with manufacturers raising their domestic and export prices at the fastest pace since July 2013.
Year-ahead investment intentions for plant & machinery and innovation turned negative, though firms still plan to raise spending on training & retraining. A record proportion of firms cited a need for replacement as driving their planned capital expenditure plans.
This survey was conducted prior to the announcement of a General Election.
Hugh Aitken, CBI Scotland Director, said: “Scottish manufacturing output has strengthened and employment in our factories has also risen at a decent rate.
"Domestic and export orders growth remains decent and firms are optimistic that they will pick-up over both the next quarter and the year ahead.
“However input cost inflation remains high, prompting firms to hike their output prices at the fastest pace in nearly three years, which will eventually end up feeding through to prices at the till.”
Key findings – looking ahead: