UK Jan manufacturing order books worst since Aug 2005 - CBI UPDATE
Tuesday, January 24, 2006 11:47:48 AM
afxpress.com
(Updating with more detail on quarterly survey)
LONDON (AFX) - The hoped for improvement in the UK manufacturing sector failed to materialise in January with order books falling back to lows not seen since the summer of 2005, a leading business lobby group said today
In its industrial trends survey, the Confederation of British Industry said that 42 pct of firms reported lower than normal order books while 14 pct reported higher orders. The resulting net balance of -28 pct compares with -22 pct the previous months and expectations of an improvement to -20 pct pct
The latest reading is also the weakest since August last year
Not all the news was bad, however, with export orders improving sharply
A total of 33 pct of firms said export orders were below normal while 23 pct said they were above normal, resulting in a net balance of -10 pct in January. In December the net balance was at -23 pct. The latest reading is the best since August 2004
Additionally, the output balance improved to -1 pct from -4 pct in December. Manufacturers also expect domestic price pressures to rise over the coming three months, with a net balance of 12 pct of manufacturers predicting gains in the January survey compared with zero in the previous poll
From a quarterly point of view, the CBI reported that 25,000 jobs were lost in the last quarter as employers sought to offset the profit squeeze faced by the sector
Over the past 12 months, the total number of jobs lost in the sector was 106,000
At the same time, price pressures continued to accelerate with a net balance of 23 pct of manufacturers reporting an increase compared with 20 pct in the previous quarter and 13 pct before that
But manufacturers were unable to pass this on as weak demand kept prices flat and squeezed already tight profit margins further. Demand was weakest in the home market with a net balance of -15 pct of firms recording a quarter-on-quarter reduction in domestic orders
Manufacturing output in the three months to January was also down, with a balance of -6 pct of firms indicating that it was lower than in the previous three months -- the fourth successive quarterly decrease
"Conditions for manufacturers are getting increasingly tough as costs continue their seemingly inexorable rise but weak demand keeps prices down, squeezing already thin profit margins even further," Ian McCafferty, CBI chief economic adviser said
"Economic growth remains below par, partly because of the slowdown in consumer spending, and this has continued to hit manufacturers' domestic order books although exports are slightly more healthy. Investment intentions are also very weak and what is clear from the survey is that manufacturers have very little cause for optimism," he added |
