Manufacturers struggle to raise prices

Manufacturing orders remained well below normal in May and order books are now at levels last seen consistently in late-2003 according to the

monthly Industrial Trends Survey, published today.

While firms expect output to remain flat over the coming quarter, the key finding this month appears to be the deterioration in price expectations.

Despite intense cost pressures, notably from oil and metal prices, manufacturers expect to find it difficult to increase their own prices at the factory gate in the coming months. Oil prices averaged in excess of $50 a barrel during the survey period and metal prices were more than 16 per cent higher than at the same time last year. Yet, 20 per cent of firms said they expected to reduce their own prices over the next three months while 17 per cent said they expected to increase them. The balance of minus three per cent represents the weakest expectation since March 2004.