The CBI’s latest monthly Industrial Trends survey indicates that UK manufacturers expect the rate of decline in output to slow “markedly” in the next quarter and that they may be through the worst of the recession – although there is still no cause for celebration.
In the survey for May, 17% of the 575 firms surveyed said they expect the volume of output to increase over the next quarter, against 34% who forecast a drop. The resulting balance of -17% is, said the CBI, “a marked improvement on the previous month (a balance of -32%)”.
“After scaling back production very sharply at the beginning of the year, manufacturers can see a glimmer at the end of the tunnel,” said the CBI’s chief economic adviser Ian McCafferty. “They still expect manufacturing activity to fall, but at a much slower rate over the next few months. However, this was another tough month for firms, with orders at home and abroad still at very weak levels. With stock levels high relative to expected demand, manufacturers are likely to remain focused on running down their stocks further.”
Demand for UK manufactured goods remains weak with just 10% of companies reporting above normal order books and 66% claiming below normal levels. And, despite the relative weakness of sterling, export order books also remain below par.
