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Exports strong despite factory order weakness
According to a CBI survey, factory orders fell faster than expected in the year to May, though export orders put in a best performance for more than a decade. The CBI’s monthly manufacturing order books balance – the difference between the per cent of manufacturers reporting increases and those reporting decreases — eased to minus-12 in May from minus-11 in April, not as good as analysts’ expectations of a minus-9 reading, yet maintaining a slowly improving trend. Nevertheless, the exports order book balance crept up sharply in May, from a minus-13 reading in April to zero, meaning as many firms said export orders were above normal as below — the strongest performance since February 1996 when a plus-1 reading was registered. Renewed demand for capital goods such as aerospace equipment and industrial engines played a part. According to Howard Archer of market analysts Global Insight, ‘the industrial sector seems well set to make a further decent contribution to growth in the second quarter of 2006, following robust growth in the first quarter’. However metals and oil prices both rose sharply during the period surveyed, throwing further margin pressure at manufacturers, who are not expecting to be able to raise prices over coming months. Amid smaller manufacturing stars, Fenner, the specialist in lightweight and heavyweight conveyor belting for the mining and power generation markets, posted emphatic interim figures to February in buoyant energy markets. Profits surged 183 per cent north to £11.9 million, with revenues up 33 per cent to £182 million. Chairman Colin Cooke flagged up a strong start to the second half from the £295 million fully listed concern.
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