Strong growth recorded in November continued in December, but is expected to slow in early 2018

Britain’s manufacturers have ended 2017 on a high note, with output surging to meet the strongest order books in almost three decades.

The latest snapshot of industry from the CBI found the strong growth recorded in November continued in December but is expected to abate in the early months of 2018.

In a survey of 371 manufacturers, 28% said order books were above normal while 11% said they were below normal. The balance of + 17 points was the joint highest on record and well above the long-term average of – 14 points.

The employers’ organisation said order books were particularly buoyant for the motor vehicles and transport equipment, and mechanical engineering sectors.

The weak pound was helping to swell export order books, even though they were slightly softer than in November, the CBI said.

Output rose for 42% of the firms questioned during late November and early December while 11% said production was lower. The rounded balance of +30 points was above the long-term average of +4 points.

Manufacturers also reported inflationary pressure, with output prices expected to rise over the next three months at their fastest pace since June. The survey also reported that stocks of finished goods were below normal – a sign that some companies are meeting orders by running down inventories.

Samuel Tombs, the chief UK economist of Pantheon Macro, said it was only the 11th time in the 42-year history of the CBI survey that more manufacturers said stock levels were inadequate than adequate.

“All this suggests that manufacturers are running at full capacity and can’t easily ramp up production in the near-term to meet higher demand,” he added.

Anna Leach, the CBI’s head of economic intelligence, said: “As we head towards the end of 2017, UK manufacturers’ total order books remain at a near-30-year high, with export order books remaining at their strongest since the mid-1990s.

“While the lower level of sterling continues to support exporters, cost pressures remain intense. Businesses will expect to see the government’s industrial strategy make rapid progress next year to support manufacturing and the wider economy in every corner of the UK.”