Manufacturers struggle

Rising costs and weak demand have forced UK manufacturers to cut jobs in a bid to relieve tight profit margins, according to the latest quarterly survey of industrial trends by the CBI.

Manufacturing jobs fell by an estimated 25,000 in the last three months as employers sought to counter rising costs and stagnant prices by seeking greater efficiency and productivity. The total number of jobs lost in the sector in the past twelve months is 106,000.

The survey also reveals the rate at which costs are rising is accelerating - the balance of 23 per cent of manufacturers reporting an increase follows 20 per cent the previous quarter and 13 per cent before that.

Weak demand, meanwhile, kept prices flat and squeezed already tight profit margins further still as companies were unable to pass on the extra costs to their customers.

The weakness in demand is primarily in the home market - a balance of minus 15 per cent of firms recorded a quarter-on-quarter reduction in domestic orders - while the improving international economy meant export orders fared less badly (a balance of -5%).