Britain’s industrialists remain overwhelmingly confident that they will be able to pass on to their customers the fast-rising prices they face for energy and raw materials.
Makers of plant, machinery and other capital goods have now joined other manufacturers in telling the CBI’s Industrial Trends Survey for June that they plan to push through price increases this summer.
Overall, those saying they expect to raise their prices in the home market outnumber those who see a cut by 28 per cent of the 555 manufacturers who replied to the survey. That was only just short of the 30 per cent recorded in May, the highest balance recorded since February, 1995.
“Output price expectations are still elevated in the consumer and intermediate goods sectors, but they appear to have stabilised,” the CBI noted.
“But in the capital goods sector, there is a clear upward trend in expectations, with firms planning a similar rate of price increases as those in the other sectors.”
This confidence is underpinned by a pick-up in new orders, reversing a slackening trend seen in April and May.
Industrialists describing their total order books as above normal slightly outnumbered those saying they were below normal after double-digit adverse balance in the previous two months.
“After two surveys which suggested the manufacturing cycle may have been turning, total order books have returned to ‘normal’,” the CBI stated.
“This pick-up was concentrated in the consumer goods sector, which had reported that order books were well below normal in April and May,” the CBI said. “Despite this increase, however, manufacturing order books remain below the average of 2007.”
For export order there is still an adverse balance of minus five per cent, but that is down from minus 12 per cent in the two previous months.
Prospects for output remain very evenly balance for a third month.
Ian McCafferty, the CBI chief economic adviser, commented “Manufacturing demand is holding up reasonably well.
“Manufacturers, especially those exposed to the global economy, have been less affected by the slowdown in domestic spending than other sectors.
“At the same time, however, there has been no let-up from the impact of higher costs on manufacturers and the CBI’s data show firms still having to pass them on in higher prices.”
The survey was conducted between May 27 and June 11, when the pound averaged 1.26 euros and $1.97. Brent crude averaged $129.48 a barrel, up from $118.10 in May.