Swift sale secures jobs at Newtown manufacturing firm

Scottish manufacturers see output grow

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:

  • Domestic orders rose (+7%) alongside export orders (+15%)
  • 31% of firms said the volume of output over the past three months was up and 12% said it was down, giving a balance of +19%
  • 30% of manufacturers said employment numbers were up, and 19% said they were down, giving a balance of +11%, the highest since July 2014 (+28%)
  • 23% of firms said they were more optimistic about the general business situation than three months ago and 26% were less optimistic, giving a balance of -3%.  Optimism about export prospects for the year ahead rose at a stronger pace (+13%)
  • Average domestic prices grew (+21%) at their fastest since July 2013 (+31%)
  • The proportion of firms working below capacity was 35%, the lowest since July 2014 (33%)
  • Manufacturers intend to invest less on buildings (-11%) and plant & machinery (-22%) over the next 12 months

Key findings – looking ahead:

  • Domestic orders (+20%) are expected to grow more firmly over the next quarter – with expectations at their highest rate since April 2015 (+27%)
  • Export orders  are expected to grow (+16%) at a similarly solid pace to the last three months