Figures heighten the fears for recovery

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ECONOMISTS warned that the UK faces a difficult task in developing a sustainable recovery after latest monthly figures suggested a slowdown in manufacturing.

The CBI survey said manufacturers expect to reduce output over the next three months, while overall orders are relatively flat.

Only 19 per cent of those surveyed expect to increase volume of output over the course of the next three months, while 28 per cent expect it to fall.

The resulting balance marks the lowest prediction this year and is below the long-run average, said the business lobby group.

The anticipated fall is broad based, with only motor vehicles and the transport equipment sub-sector expecting to increase output.

Anna Leach, head of economic analysis at the CBI, said: “Overseas demand has improved in this month’s survey, but this has not been enough to lift overall demand and support the modest expectations for growth in production levels found in the previous survey.

“Business confidence continues to be undermined by uncertainty over events in Europe and the fast-approaching US fiscal cliff. However, we expect UK growth to pick-up somewhat in 2013 as this uncertainty gradually subsides and global growth increases.”

Howard Archer, chief economist at IHS Global Insight, said the survey added to the largely disappointing news out so far for the fourth quarter.

“Although the total orders balance actually edged up in November compared to October, the CBI survey does little to ease fears that the economy could suffer a renewed GDP dip in the fourth quarter after the 1 per cent quarter-on-quarter bounce in the third quarter.

“Indeed, the CBI survey fuels suspicion that the UK still faces a difficult task in developing sustainable significant recovery.”