Booming factory production prompts hiring and upskilling spree

FACTORIES are ramping up production at their fastest pace since 1995 and manufacturers expect to accelerate at a 40-year high in the months ahead, on strong demand from the UK and abroad.

Hiring is climbing as a result and companies are also spending more money on training their staff, a Confederation of British Industry survey shows, which indicates that manufacturers are taking steps to address a much-anticipated skills shortage.

“Output growth among UK manufacturers is the highest we’ve seen since the mid-nineties, prompting the strongest hiring spree we’ve seen in the last three years. Cost pressures are easing and firms are upbeat about the outlook for export orders,” said Rain Newton-smith, the CBI’S chief economist. “It’s great to see the benefits from the decline in sterling for UK exporters feeding through.”

The proportion of companies reporting rising output outweighed those reporting falling output by a margin of 31 percentage points, rising from 22 percentage points in April to the strongest level in more than 20 years. Export orders are rising, according to a net balance of 17pc of manufacturers, while the domestic demand balance stands at 19pc, although these numbers have slowed on the quarter.

However, the study is based on a relatively small sample of several hundred businesses, and so far there has been little evidence in larger surveys, or in the official economic data, of a surge in factory output. Economists anticipate modest GDP growth in the second quarter of the year, but hope that the CBI numbers could be the first signs of a stronger third quarter.

Any boost from the weak pound is set to stay – the currency is likely to remain low for the foreseeable future, as major investment managers see no reason for sterling to recover in the years to come. Analysts at Northern Trust Asset Management made the prediction in their forecasts of global trends over the next five years. “We are not necessarily expecting a significantly appreciative pound,” said Wayne Bowers, the firm’s chief executive and chief investment officer for the European, African and Asia-pacific regions.

“In the [Brexit] negotiation itself we think the pound will be under pressure,” he said, predicting that the currency would follow a trajectory that was “flat to down”.