Manufacturing still mired in recession

2003

Hopes of recovery in the UK’s beleaguered manufacturing sector have been dashed as weak domestic and international demand continuing to block a long-awaited turnaround.

The CBI’s latest Monthly Industrial Trends survey shows that the more competitive pound has yet to benefit exporters. The CBI has called for a cut in interest rates to lift confidence and pull the hard-pressed sector out of recession.

The CBI’s data showed no significant improvement in orders on last month. Thirty-nine per cent of firms said orders were below normal while just 12 per cent said they were above. The balance of minus 27 per cent compares with minus 29 per cent recorded in the May and April surveys.

Overseas demand remains weak with export orders below normal and slightly worse than last month. The balance of minus 35 per cent compares with minus 32 per cent last month.

Firms continue to expect output to decline modestly over the next four months. The balance of minus six per cent of companies expecting to cut production compares with minus three per cent last month. Manufacturers have not expected a rise in output since October 2002.

Doug Godden, CBI Head of Economic Analysis, said: "Manufacturers' long wait for recovery seems set to continue and firms will take little comfort from the current business climate. Demand at home and abroad remains persistently weak and output continues to stagnate. Companies are cautious about the future and with no danger from inflation, an interest rate cut remains appropriate."

On top of those woes, official data showed a slowdown in consumer spending last month. Hopes of a post-war boom in high street business failed to materialise as retail sales volumes in May fell by 0.1% on the previous month. Sales at food stores and clothing and footwear shops bore the brunt of the weaker performance.

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