Burgeoning domestic demand raised total order books for manufactured goods to their highest levels in a dozen years in February, according to the latest industrial trends survey from the CBI.

The leading UK business body said a balance of four per cent of respondents to its February survey claimed total order books were ‘above normal’, the strongest figure since the summer of 1995, which saw a balance of plus five per cent. This also represented a marked improvement over January, when a balance of nine per cent said total orders were ‘below normal’.

There was also optimism for the future, with a balance of plus 28 per cent of respondents forecasting growth, expecting to increase output over the next three months.

There was good news on exports, with orders climbing slightly despite the strong pound making UK goods pricier overseas – the pound recently climbed to a 14-year high versus the US greenback and a four-year peak against the euro – with a balance of plus 19 firms expecting to be able to raise prices.

CBI head of economic analysis Doug Godden commented that ‘this is an upbeat survey continuing the trend of manufacturing recovery that started
in early 2006’.

He explained that ‘in a climate of strengthening demand, businesses have finally been achieving some price rises and expect to continue doing so, helping to rebuild battered profit margins. Export orders are still doing well, despite the strong pound’. It was too early to say if the recent base rate rise to 5.25 per cent would put a dampener on demand.