UK manufacturing orders fall as domestic demand dips
By Lydia Adetunji
Published: April 28 2003 12:28 | Last Updated: April 28 2003 12:28
UK manufacturing orders fell at their fastest rate in four years in April, according to a quarterly
survey that is likely to increase pressure on the Bank of England for a further interest rate cut.
According to the Confederation of British Industry's industrial trends survey, the decline in orders
was driven by a sharp deterioration in domestic demand. That suggested the weakness in global
trading conditions which caused the manufacturing recession was spreading to the home
market, the survey said.
Thirty-seven per cent of companies surveyed reported a fall in orders over the past four months,
while 16 per cent reported a rise. "Total orders are expected to continue falling sharply over the
coming months," the survey said.
Manufacturing output also dropped over the past four months, according to the survey.
Manufacturers' confidence declined for the third consecutive quarter, falling from -19 in January
to -27 in April's survey, although that could partly be attributed to the war in Iraq. The survey
was carried out between March 20 and April 9.
"The end of the Iraq conflict will steady nerves. But the world's economic problems were there
before the war and they are still there now," said Digby Jones, CBI director-general.
"Manufacturers hoped that domestic demand would hold up until there was a pick up in global
trade but that does not seem to be happening."
Mr Jones said the problem had been compounded by a slowdown in other parts of the economy,
and called for a further interest rate cut from the Bank of England. Analysts said the weak
survey increased the chances of a rate cut next month.
Companies surveyed by the CBI continued to report planned cuts in capital expenditure over the
next 12 months as a result of over capacity, uncertain demand and pressure on profit margins.
Seventy per cent of respondents reported that they were working below capacity, compared to
74 per cent in January's survey, which was the highest number for two decades.
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