Gloomy manufacturing output raises fears of renewed slump

Ben Southwood
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UK MANUFACTURING output will fall over the next three months, businesses said in a survey out yesterday, leading analysts to suggest the economy could slip back into decline in the fourth quarter.

Of the 409 manufacturers responding to the Confederation of British Industry’s (CBI) industrial trends survey for November, only 19 per cent expect to increase their volume of output over the course of the next three months, while 28 per cent expect it to fall. The resulting balance of minus nine per cent marks the lowest prediction in the monthly survey this year.

The pain was compounded by rapidly worsening order books. Total orders stood at minus 21 in November’s survey, indicating sharp contraction, despite the mild improvement from minus 23 in October.

And although export orders improved from a balance of minus 22 to minus 12, this figure would also indicate another substantial contraction.

Despite the weak picture, there was no let up in price inflation – the net balance of firms predicting average prices would rise increased in November, the fourth straight month of upward movement.

“The CBI survey fuels suspicion that the UK still faces a difficult task in developing significant recovery in the face of ongoing domestic and Eurozone headwinds,” said Howard Archer at IHS Global Insight.