LONDON (Reuters) -British manufacturers reported the joint-strongest growth in orders this month since records began, while output rose at the fastest rate since July, figures from the Confederation of British Industry showed on Thursday.
The CBI data fits a broader pattern of fairly solid current demand conditions for businesses, but mounting worries about the outlook for later this year as surging prices exact a growing toll on consumer spending and some businesses’ profit margins.
The CBI’s headline order book index – which measures the extent to which order levels are above or below normal – rose to +26 in May from +14 in April, matching previous records from March and November.
Export orders jumped to +19 in May from -9, their highest since January 2018, and the CBI’s gauge of output over the past three months rose to a 10-month high of +30 from +19.
Official data last week showed a modest 1.9% rise in factory output in the year to March.
“Manufacturers have reported output growth and order books improving in May. But cost pressures remain acute and are pushing manufacturers to raise prices,” CBI deputy chief economist Anna Leach said.
British consumer price inflation hit a 40-year high of 9.0% in April, while manufacturers’ raw material costs are up 18.6% and they have raised the prices they charge by 14.0%, according to official data released on Wednesday.
The CBI said the difference between the percentage of businesses planning to raise rather than lower prices over the next three months increased to +75 in May from +71 in April, just short of March’s record +80.
The CBI’s director-general, Tony Danker, has called on the government to act now to support households which are already suffering “real hardship”, and to commit to long-term tax breaks for business investment.
“Putting pounds in the pockets of people already struggling should not be delayed, and must be coupled with action to support firms’ cashflow and to stimulate investment,” Leach said.
(Reporting by David Milliken, editing by Andy Bruce)