Manufactuting output expectations hit 28 year low

The three month outlook of UK manufacturers is at its weakest since 1980 according to the Confederation of British Industry’s (CBI) Industrial Trends Survey released today. The majority (56%) of manufacturers believe their output will fall, compared to just 14% who think it will rise.

In addition to weak order books, firms expect no price rises over the next quarter.

Although 16% of manufacturers say their order books are above normal, 53% say they are below what they’d have expected.

Some have speculated that opportunities may arise for exporters as sterling slides against other currencies.  This may well be the case, but hasn’t fed through into the CBI figures which show only 13% seeing their export books better than normal with 44% finding them worse.

As CBI chief economic adviser, Ian McCafferty, says:

With a sharper and more prolonged UK recession in prospect, conditions are going to remain tough for some time. A slowing global economy, particularly in the eurozone, makes the immediate benefits of a weak pound fairly muted for exporters.

Once again, the CBI calls for further cuts in interest rates, a traditional call from most groups representing business.

Nevertheless, this outlook and other economic indicators suggest a further interest rate cut is precisely what the Bank of England is likely to authorise.

[Picture credit: Todd Ehlers @ Flickr]