Food and drink driving growth, says CBI

By John Wood

- Last updated on GMT

Related tags: Alcoholic beverage, Cbi

CBI survey: food and drink was the star performer
CBI survey: food and drink was the star performer
Food and drink was one of the star performers driving growth within UK manufacturing in the last three months, according the Confederation of British Industry (CBI).

The latest CBI quarterly Industrial Trends Survey for the second quarter of 2012 showed only modest growth in total manufacturing, but drilling down into individual sectors revealed significant winners and losers and food, drink and tobacco was the star performer.

The report noted: ”Output growth increased a little in the three months to July for the second consecutive quarter. However, growth was still much slower than it was over late 2010 and the first three quarters of 2011. The drivers of output growth were the consumer goods sectors, in particular food and drink and chemicals, while output in other sectors was flat or falling.

“Growth is expected to pick up next month and to become more broadly based, with a further rise in food and drink."

The report is based on responses from manufacturers and the figures reported are the percentage difference between those expecting growth and those expected decline.

Food and drink had the highest figure for growth at +52, while the figure for overall manufacturing was +8.

High expectations

Commenting specifically on the food, drink and tobacco sector, the report said: “Business sentiment was higher than three months ago. Firms reported strong growth of both output and new orders that surpassed quite high expectations. The former increased for the fifth quarter in succession.

“Over the next three months firms predict further strong growth of output and total new orders. Employment also grew, and is expected to hold at this higher level next quarter.

“Both average unit costs and average domestic prices fell sharply. Prices are expected to stabilise next quarter, and average costs to fall more slowly.

“For the first time in a year, firms intend to spend more on plant and machinery in the coming 12 months than they did last year.”

Further escalation

Anna Leach, CBI head of economic analysis, said: “Despite a further escalation in the Eurozone crisis, this survey shows some resilience in the UK manufacturing sector, with sentiment about the general economic situation broadly stable.

“Both demand and production grew steadily in the three months to July, and this is expected to continue over the next three months.

“However, with Europe as our biggest export market, and while the Eurozone crisis continues unresolved, prospects for UK manufacturing will remain uncertain.”

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