-Rain Newton-Smith, economics director at the CBI
Activity in the British manufacturing sector rose to the highest level in February, as both overseas and domestic orders increased, suggesting a brighter outlook for the coming months. The Confederation of British Industry survey's total order book balance advanced to +10 in February up from +4 in the preceding month, overshooting expectations of +6. CBI's index measuring expected volume of output for the next three months soared to +25, the highest level since September and compared with +13 in January. A reading above 0.0 indicates increasing order volume is expected, below points expectations are for lower volume. Yet, a lacklustre demand from the Euro zone remained a headwind for British manufacturers. However, that might change, if quantitative easing by the ECB provides the desired effect of spurring demand in the currency bloc.
The data raised hopes that Britain's economic recovery is regaining steam following a slight deceleration in the final quarter of 2014. While a sharp decline in oil prices boosted activity in the manufacturing sector by lowering operating costs, North Sea producers are clearly being hurt. The latest data showed the UK's industrial output slowed further at the end of last year. Figures, however, were offset by a better-than-expected performance in manufacturing.
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