The survey of 408 companies reported steady growth in new domestic orders over the quarter and a rise in output in line with expectations. Business optimism also improved a little further in the three months to July.
But new export orders fell, having been broadly flat for the previous two quarters. Export prices continued their downward trend, falling at the fastest pace since October 2003, and are widely expected to limit export orders in the next quarter.
Looking ahead, growth in output and total and domestic orders is expected to gather pace, whereas exports look set to fall again in the three months to October.
Average unit costs fell a little for the first time since 1999, with domestic prices staying broadly flat. More jobs were added in the three months to July, and employment growth is projected to continue through to October.
The survey found that 32 per cent of small & medium sized enterprise (SME) manufacturers said they were more optimistic, while 18 per cent said they were less optimistic, giving a balance of +14 per cent, up from +4 per cent last quarter
30 per cent of businesses said their volume of output was up, and 18 per cent said it was down, giving a balance of +12 per cent.
Companies expect output growth to pick-up somewhat in the next quarter, and 30 per cent said their domestic orders were up, while 22 per cent said they were down, giving a balance of +8 per cent, with the expectation of slightly stronger orders growth next quarter.
Almost a fifth of the companies surveyed said export orders rose over the past three months, with 26 per cent saying they fell, leaving a balance of -8 per cent. Firms anticipate export orders to fall at a broadly similar pace in the next quarter.
Firms’ optimism about their exports prospects for the year ahead remained negative for the second consecutive quarter. Export prices fell again and at the fastest pace since October 2003 when the balance was -20 per cent.
Anna Leach, CBI Head of Economic Analysis, said: “Optimism among smaller manufacturers improved this quarter, alongside steady employment growth, rising output and new domestic orders.
“But the relative strength of the Pound against the Euro is hitting export orders and margins. This, alongside uncertainty regarding Greece, threatens growth prospects in the Eurozone.”