Food and drink leads manufacturing growth: CBI

By Michael Stones

- Last updated on GMT

Food and drink is leading the way in manufacturing output, claims CBI
Food and drink is leading the way in manufacturing output, claims CBI

Related tags Industry

Food and drink production is leading growth in the UK's manufacturing sector, according to the latest industrial trends survey from the Confederation of British Industry (CBI).

The CBI’s survey of 522 firms revealed the growth in manufacturing output reached its highest level for seven months during February.

A CBI spokesman told our sister title Food Manufacture​ output in the food and drink sector in the three months to February was among the fastest of any manufacturing sub-sector. Well over half (59%) of food and drink manufacturers reported rising output, while 22% said it had fallen, giving a rounded balance of +37%, the strongest in five months, said the spokesman.

“Since food and drink is the UK’s largest single manufacturing sector, it was the greatest contributor to overall UK manufacturing growth over that period,”​ he said.

Exports orders

Export orders reported by the food and drink manufacturing sector since December were also running at well above normal levels. Last month a quarter of food and drink producers said that export orders were above normal and 4% claimed that export orders were below, giving a rounded balance of 21%.

“Although the sector plays a relatively smaller role in manufacturing exports than it does on the domestic scene, food and drink was nonetheless the second-largest contributor to export orders' strength in February,”​ said the spokesman.

The top sector for exports was motor vehicles and transport equipment. General manufacturing export orders also rallied last month, to a level well above average, regaining some of the ground lost at the end of last year. But exports still lag behind more robust domestic orders.

Springtime for manufacturers

“Our manufacturers have more of a spring in their step this month, regaining some of the momentum lost towards the end of last year.”

Rain Newton-Smith, CBI economics director

Over the next three months manufacturers expected a modest rise in selling prices, while expectations for price inflation remained moderate.

CBI economics director Rain Newton-Smith highlighted the key contribution of falling oil prices to the improved manufacturing output. “Our manufacturers have more of a spring in their step this month, regaining some of the momentum lost towards the end of last year,”​ said Newton-Smith.

‘Drop in oil pirces is good news’

“The drop in oil prices is good news for the manufacturing sector in the UK, bringing with it lower operating costs, but North Sea producers are clearly suffering.

“Export orders picked up significantly, to a level not seen for six months, but uncertainty over prospects in the eurozone will continue to weigh on export demand. So, it’s imperative we continue to help manufacturers sell their products and services into high-growth markets around the globe.”

Of the 18 manufacturing sectors monitored in the survey, 16 – including food and drink manufacturing – anticipated growth in the next quarter.

The CBI represents 190,000 businesses, of all sizes and sectors, which together employ nearly 7M people or about one third of the private sector workforce.

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