UK Manufacturers Expects Production To Increase In The Next Three Months - CBI Survey

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The decline in UK manufacturing output has eased considerably in the past three months and modest growth is expected in the next three months, results of the latest quarterly industrial trends survey conducted by the Confederation of British Industry revealed Wednesday.

The volume of manufacturing output continued to fall in the three months to October, with 34% of firms saying it fell, and 26% saying it rose, giving a balance of minus 8%. This marks a much slower rate of decline than in July's survey, when the balance was minus 31%. Asked about the next three months, a balance of 4% of firms expects growth, which is the highest since January 2008, when the balance was 9%.

"Having endured a brutal recession, manufacturers appear to be turning the corner, with optimism up and mild growth in output and demand expected over the next three months," CBI Chief Economic Adviser Ian McCafferty said. "However, the recovery from the downturn will be protracted and weak - investment will remain constrained and unemployment will continue rising."

Domestic demand continued to slow in the three months to October, but marginal growth is expected in the three months ahead. Helped by a weak sterling, the contraction in demand for exports was less than expected and firms expect export orders to grow over the coming three months.

Sentiment about export prospects for the year ahead is, at a balance of 16%, the strongest since July 1995, when the balance was 21%. And a net 10% are now more optimistic about the overall business situation than they were three months ago, which is the first improvement in sentiment since April 2007.

The CBI found the tight flow of credit to many manufacturers remains a worry, and firms which are unable to get funding to meet orders could see their hopes of recovery stall. 14% of firms said an inability to raise external finance was limiting capital investment, which marks an increase from 8% in July.

Firms are planning to spend more on innovation in the next twelve months, while expenditure on staff training and plant and machinery will be virtually unchanged from the levels of the past year, the CBI said. However, over three quarters of firms reported that they have spare capacity, and this is likely to constrain investment levels going forwards.

The decline in UK manufacturing output has eased considerably in the past three months and modest growth is expected in the next three months, results of the latest quarterly industrial trends survey conducted by the Confederation of British Industry revealed Wednesday. (Market News Provided by RTTNews)