There was no let-up in the economic misery yesterday as a survey showed manufacturers rated their output prospects as the worst for nearly seven years.
The CBI industrial trend survey for August showed a balance of 13 per cent of firms expecting their volume of output to fall over the next quarter. It is the worst reading since December 2001, and a deterioration from the 7 per cent recorded in July.
In another sign of tough times for the sector, the survey reported demand for goods also weakened this month, with a balance of 13 per cent judging their order book levels to be "below normal". It is the worst reading since October 2006.
The pressures on activity appear to have had little effect on soaring costs being faced by businesses, with the level of manufacturers expecting price rises in the next three months remaining close to the 18-year high recorded in July.
A balance of 31 per cent of firms are bracing themselves for price rises, just down from the 34 per cent seen in July.
CBI chief economic adviser Ian McCafferty said: "Manufacturers are becoming more downbeat about forthcoming levels of activity but are still having to raise their prices due to the severity of recent cost increases.
"Domestic conditions remain sluggish and the recent slowdown in the euro zone economies is starting to make conditions tougher for UK manufacturing exporters, although the weaker pound will offer some relief."
Bank of England governor Mervyn King warned last week that he expected the economy as a whole to contract at least for one quarter over the coming year as inflation reached 5 per cent in the coming months.
In more evidence of weaker manufacturing the CBI survey showed the level of stocks increasing this month – consistent with slowing output.
A balance of 18 per cent of firms said stock levels were more than adequate, the highest reading this year.
The full article contains 352 words and appears in n/a newspaper.
