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23 Mar 2021 | 12:00

UK manufacturing whirs back to life in March, despite headwinds from shortages

(Sharecast News) - Britain's factories are whirring back to life with activity expected to pick up rapidly over the next quarter, the results of a closely-followed survey revealed.

The Confederation of British Industry's Industrial Trends Survey 's total order books balance strengthened to -5% for the three months up until March, against a reading of -24% in February and the economist consensus for a print of -19%.

"This month's Budget gave grounds for optimism in the manufacturing sector. In particular, the super-deduction could be a real catalyst to investment plans," CBI chief economist, Anna Leach, said.

A so-called diffusion index tracking growth in output rose to +3% from -8% - reaching its highest balance since May 2019.

By sub-sectors, electronic engineering and plastic products registered the fastest growth, offset by declines in paper, printing and media, and aerospace.

Expectations for production over the three months to June meanwhile were at their strongest since August 2017.

Prices were also seen accelerating over the next three months, and expected to rise at their quickest pace since February 2919, with the diffusion index for those rising from +3% to +20%.

But Leah attributed price pressures to increased freight costs and shortages of raw materials.

Tom Crotty, Group Director at INEOS and chair of CBI's manufacturing council, drove that point home further.

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," he said.

"It's therefore important for the government continues to support the sector through the coming critical weeks and months ahead."

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