Glimmer of light for manufacturers

Manufacturers suffered their worst fall in demand for nearly 30 years in the past three months, but there are faint signs of improving confidence, a survey has revealed.

The CBI's quarterly industrial trends survey showed a balance of 47 percent of firms reporting falling new orders since January, the worst result since 1980. 

Most firms are also expecting further declines in orders in the next three months - a balance of 36 percent - but this is an improvement on an even gloomier 54 percent registered three months ago.

Ian McCafferty, the CBI's chief economic adviser, said: "The first quarter of 2009 was extremely tough for UK manufacturers, but this survey shows firms hope that the worst may be behind them, with the pace of decline slowing slightly."

But Capital Economics' Vicky Redwood said: "While manufacturers have become somewhat more upbeat, the outlook still looks pretty grim. There is growing evidence that the worst of the falls in output are behind us - but still nothing to suggest that the economy will actually be growing any time soon."

Despite signs that the pace of decline may be easing, employment in the sector fell at its fastest pace since 1991, the CBI said.
Based on the survey, the organisation estimates that 62,000 jobs were lost in manufacturing during a torrid beginning to the year and a further 51,000 will go in the three months ahead.

More than three-quarters of firms - 76 percent - said they were now working below capacity, the highest number since 1983. Plans for training and investment are being cut back at the fastest rate for 20 years, the CBI added.

Over the quarter, firms were also wrong-footed by a faster than expected collapse in exports, as overseas demand faltered despite the slump in the pound.

Manufacturers expect export orders to fall again in the three months ahead but at a slower pace, the survey said.

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