Packed order books show the sector is still gathering pace

The survey of nearly 400 manufacturers found that total orders rose for the fifth consecutive month, while exports orders also grew strongly.

Meanwhile, output growth for the three months to September rose to its highest rate since August 2011. Output is expected to rise strongly again over the next three months.

With demand building across the UK and globally, stocks have fallen to their lowest level since last November.

But inflationary pressures remain muted, with average prices expected to remain relatively steady over the next three months.

Stephen Gifford, CBI director of economics, said: “This month’s results show the manufacturing recovery continuing to gather pace.

“Order books are the fullest they’ve been since the start of the financial crisis, and firms are ramping up production to meet demand.

“Firms are more upbeat about growth prospects in the coming quarter than at any time since 1995.”

The CBI said 28 per cent of firms reported that total order books were above normal in September and 19 per cent said they were below, giving a balance of 9 per cent, the highest figure since August 2007.

It said 23 per cent reported that export order books were above normal in September and 18 per cent that they were below. The resulting balance of 6 per cent is the strongest since February 2011.

The volume of output in the three months to September rose at its fastest rate since August 2011, the CBI added.

Some 39 per cent of firms said it rose, 21 per cent said it fell, giving a stronger than expected balance of 18 per cent.

Firms expect to increase output at an even faster pace in the next three months: 44 per cent expect to raise output, 11 per cent expect to reduce output, giving a balance of 33 per cent, the strongest expectation since March 1995, according to the lobby group.

Stock levels of finished goods dropped to their lowest level in September since November 2012, while average prices in the next three months are expected to remain stable.

Howard Archer, economist at IHS Global Insight, said: “An all-round robust CBI industrial trends survey for September, coupled with news that car manufacturing output was up 16.2 per cent year-on-year in August, indicates that the manufacturing sector has had a very decent third quarter and contributed to likely stronger GDP growth.”

He added: “Furthermore, the strong manufacturing order books in September reported by the CBI bodes well for manufacturing output in the fourth quarter.”

Mr Archer said: “Moving forward, manufacturers will be hoping that the recent extended good news on the UK economy further lifts business and consumer confidence which in turn translates into sustained higher demand for capital goods and consumer durable goods.

“Encouragingly, there is evidence in recent surveys that businesses are now lifting their investment plans – the August quarterly survey from EEF shows that the balance of manufacturers planning to raise capital investment is now at a six-year high – while consumers’ opinion of the climate for making major purchases is reported to have risen appreciably in August, according to the latest GfK/NOP survey.”

He said although global economic conditions are still challenging, the prospects for UK exports are being helped by the eurozone finally exiting recession.