The decline in UK manufacturing output has eased considerably in the past three months, says the CBI
By Ian Armitage
The decline in UK manufacturing output has eased in the past three months and the sector's prospects look brighter, with “modest growth expected” in the three months ahead, the CBI has said.
Its latest Quarterly Industrial Trends Survey also revealed that the weakness of sterling is helping export competitiveness, although stocks are still being run down and difficult access to finance is constraining output and investment.
The volume of manufacturing output continued to fall in the three months to October, with 34 percent of firms saying it fell, and 26 percent saying it rose, giving a balance of -8 percent.
This marks a much slower rate of decline than in July's survey (-31 percent).
Domestic demand, meanwhile, continued to slow in the three months to October, but marginal growth is expected in the three months ahead, the report said.
Ian McCafferty, CBI Chief Economic Adviser, said: "Having endured a brutal recession, manufacturers appear to be turning the corner, with optimism up and mild growth in output and demand expected over the next three months. Firms finally seem to be benefiting from a weakened pound, as global markets recover, helping to lift demand for UK exports.
"However, the recovery from the downturn will be protracted and weak - investment will remain constrained and unemployment will continue rising. The tight flow of credit to many manufacturers remains a worry, and firms which are unable to get funding to meet orders could see their hopes of recovery stall."
Firms are planning to spend more on innovation in the next twelve months, while expenditure on staff training and plant & machinery will be virtually unchanged from the levels of the past year. However, over three quarters of firms reported that they have spare capacity, and this is likely to constrain investment levels going forwards.
SOURCE: http://www.cbi.org.uk/ndbs/press.nsf/0363c1f07c6ca12a8025671c00381cc7/73e221243025e08480257654003fd7b1?opendocument
Edited by Ellie Duncan