UK manufacturers predict production will fall a little over the next three months, having expected a pick-up in output in the two previous surveys, the CBI said today (Tuesday).
In the latest CBI monthly Industrial Trends Survey, 18% of manufacturers anticipate the volume of output will rise over the next three months, while 25% think it will fall. The resulting balance of -7% is the most negative since July (-14%) and is a set back to firms' output expectations in the past two months’ surveys.
The lack of a sustained pick-up in output reflects the ongoing weakness of demand. A balance of -42% of firms said total order books were below normal, which was a slight improvement on November (-45%) and the least negative since December 2008 (-35%).
Export order books weakened again, however, reversing part of the improvement seen in November. A balance of -41% said they were below normal compared to -37% last month.
Ian McCafferty, CBI Chief Economic Adviser, said:
"Manufacturing prospects were starting to look up but have dipped again in this latest survey. Output had been edging higher after the rapid stock depletion earlier this year. But with demand moving only slowly in the right direction, order books remain very weak and firms now expect production will fall back slightly in the next three months. This highlights the fragility of the recovery and the likelihood that economic activity will continue to bump along the bottom early next year."
The adequacy of stocks fell back a little in December. The balance of +15% of firms saying stock levels are more than sufficient to meet demand is lower than in November (+20%).
Manufacturers expect that prices will fall in the next three months, and this survey’s balance of -6% expecting a fall is in line with the previous two months.
1. A balance is the difference between the percentage of manufacturers reporting an increase and those reporting a decrease.
2. The December 2009 CBI Industrial Trends Survey was conducted between 18th November and 2nd December. 504 manufacturers took part.
3. During the survey period the pound averaged euro 1.11 and $1.66, while Brent Crude averaged $77.87 per barrel, compared with euro 1.11 and $1.65 and $77.48 per barrel in the November survey period.
4. The CBI is the UK's leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. With offices across the UK as well as representation in Brussels, Washington, Beijing and Delhi the CBI communicates the British business voice around the world.