UK manufacturing optimism improved at its fastest pace for almost 50 years and investment intentions rebounded as economies began to reopen from Covid-19 lockdowns, a CBI survey showed.
Business sentiment in the three months to April jumped to +38% from -22% in January, the business group’s survey of 288 manufacturers found. The improvement was the greatest since April 1973 when Edward Heath was prime minister and Slade ruled the pop charts.
Investment intentions improved across the sector. Firms expect to spend more on buildings, plant and machinery, innovation and training compared with a year earlier. Plans for plant and machinery were the strongest since July 1997.
Factory headcounts rose at their fastest pace since July 2018 and firms expect employment in the sector to accelerate in the coming quarter with sentiment the strongest since 1974.
Manufacturing output was broadly flat with many economies in lockdowns in the quarter to April but orders picked up and are expected to increase rapidly, the CBI said. Export optimism strengthened for the first time in almost three years that dominated by concerns over Brexit and then the pandemic.
Rain Newton-Smith, the CBI’s chief economist, said: “Manufacturers have reported the biggest increase in optimism in nearly 50 years in this month’s quarterly survey. Phased reopening has lifted the mood among firms, notably driving orders, employment, and investment plans.
“Continuing to support firms while they get on a steadier footing as restrictions ease will be crucial to recovery. The government should continue to work closely with business to ensure reopening is a success, while boosting competitiveness over the long-term.”
The outlook was tempered by rising costs, which accelerated at the quickest pace for 10 years. Average domestic prices rose at the quickest rate for almost three years and are expected to rise further.