The UK economy was given a welcome boost today after a survey reported a more confident manufacturing sector and stronger order books.
A balance of -2 per cent of companies said order books were higher than normal this month, the CBI survey said, an improvement on April's balance of minus 11%.
With demand steadily improving, a balance of 20% of firms expect a rise in output in the next three months, well above the long-term average, the CBI said.
The manufacturing sector has wavered in recent weeks, fuelling fears that a strong run for the industry was losing momentum.
Ian McCafferty, CBI chief economic adviser, said: "Although there has been talk recently that the manufacturing recovery may be starting to flag, our survey shows manufacturers are still seeing solid growth in activity.
"Total and export order books are both well above their long-run averages and, with demand healthy, firms are predicting another strong rise in output."
Predictions for output price inflation have also moderated compared with earlier this year, but are still very strong by historical comparison, reflecting high commodity prices and import costs, he added.
Export order books picked up in the month, with a balance of -3 per cent of companies reporting an improvement, compared with -6 per cent in April.
A balance of 24 per cent of manufacturers are predicting they will raise output prices over the coming quarter, a sharp decline on a balance of 36 per cent in April.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "The CBI survey indicated that manufacturing orders picked up in May, which is particularly welcome news given some recent signs that the hitherto buoyant sector could be coming off the boil."
But Mr Archer warned: "The concern is that manufacturers will find life increasingly challenging over the coming months as stock rebuilding wanes and tighter fiscal policy weighs down on domestic demand.
"Meanwhile, high oil prices and other elevated input costs are causing problems for manufacturers by substantially squeezing their margins and putting pressure on them to raise prices and risk losing business."
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