Setback for UK manufacturing

Manufacturing orders have fallen sharply since January with firms reporting the weakest quarterly performance since July 2003. Orders for consumer goods declined significantly, while capital goods orders were unchanged, according to the CBI's quarterly Industrial Trends Survey.

The reports says that over the three months to April costs and prices increased at the fastest rate since July 1995, with costs outstripping prices. Falling orders and output and rising costs and prices have led to the third successive deterioration in confidence.

Cost pressures intensified across all major sectors as manufacturers faced the knock-on effect of sharp rises in oil prices, which averaged 30.5 per cent more in the April survey period than in January. This also represented a 67 per cent increase since this time last year. The cost of other raw materials such as metals is also much higher than a year ago.

Forty-one per cent of firms saw costs rise over the past three months, while nine per cent saw them fall. This surveys' balance of plus 32 per cent compares with plus 23 per cent in the previous survey.