The latest CBI industrial trends survey signalled the strongest order book performance since April 2019 in March.
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UK factories have seen their strongest order books for nearly two years this month as the economy fights back after a year of Covid-19 restrictions, according to new figures.
The latest CBI industrial trends survey showed the balance for total order books improved from minus 24% in February to minus 5% this month – the best result since April 2019.
Output also held broadly flat, marking the best performance since May 2019, while manufacturers are also markedly more upbeat on the outlook, with expectations at their strongest for more than three-and-a-half years.
It comes amid hopes for a vaccine-fuelled bounceback in the wider economy once lockdown lifts.
The Bank of England last week said the successful vaccination programme and road map to ease the lockdown was set to drive a bigger-than-forecast surge in consumer spending.
Anna Leach, CBI deputy chief economist, said: “It’s great to see the mood lift among manufacturers, buoyed by a jump in order books.
“But firms continue to grapple with higher freight costs as well as raw material shortages.”
The survey of 321 manufacturers revealed they are braced for output price growth to ramp up quickly in the next quarter, while the balance of companies that said they had broadly adequate stocks was at its lowest point in three years.
There are also concerns in the sector over pandemic woes in Europe, where the vaccine rollout has been slow and countries are being forced to impose restrictions to control a third wave of the pandemic.
Tom Crotty, group director at chemicals giant Ineos and chairman of the CBI manufacturing council, said: “The improvement in order books, and the more positive outlook for output, is a welcome boost for the sector following a difficult start to 2021.
“Nevertheless, there can be no doubt that this progress is fragile and the sector continues to operate in a challenging landscape.
“Container shortages and higher freight costs are causing issues with supply chains and many firms are also encountering unanticipated difficulties with the new post-Brexit trading arrangements.”