More gloom for manufacturers
Dec 16 2011
Many manufacturers expect production to fall
UK manufacturers report a further weakening in total order books in December, while export orders remain well below their long term average.
As a result, companies expect production to fall over the coming quarter, according to the Confederation of British Industry’s latest monthly Industrial Trends Survey.
Of the 434 manufacturers responding, 18 per cent report total order books to be above normal, while 41 per cent say that they are below. The resulting survey balance of -23 per cent is the lowest since October 2010 (-28 per cent).
Export demand also remains depressed, with 12 per cent reporting export order books to be above normal, 44 per cent say that they are below, with the balance of -32 per cent the lowest since January 2010 (-33 per cent).
In line with weakened order books, manufacturers expect to reduce production over the next three months. While 24 per cent of firms believe output will rise in the next quarter, 32 per cent expect to cut back on production. The difference of -8 per cent is the third consecutive negative survey balance.
Ian McCafferty, CBI Chief Economic Adviser, says, ‘Conditions in the UK manufacturing sector remain difficult, with demand both at home and abroad subdued. The weaker export performance no doubt reflects ongoing instability in the Euro area, our biggest export market, and its knock-on impact on prospects for the real economy.
‘A clear and orderly resolution to the crisis remains essential to prevent further adverse effects on both UK manufacturing and the wider economy, and to lift business confidence.’
Weak demand and output prospects have kept expectations for output price inflation muted. While 22 per cent of manufacturers predict that they will raise output prices over the coming quarter, 15 per cent expect to lower prices. The resulting balance of +7 per cent is slightly higher than in recent months, but still significantly lower than stronger expectations seen in the first half of 2011.
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