Manufacturing industry is still in recession and interest rate cuts are needed to encourage signs of recovery, the Confederation of British Industry reported this week.
The latest CBI Quarterly Industrial Trends Survey showed a fall in output and orders for the third successive quarter, but the rate of decline was down. Business confidence also fell, but less sharply than in the previous quarter. The CBI estimates 40,000 manufacturing jobs will go over the next quarter.
‘There are strong signs of deflation in the sector, with prices expected to fall at the sharpest rate since 1958,’ CBI chief economic adviser Kate Barker said.
‘With domestic orders still weak it is too soon to say whether manufacturers have reached a turning point,’ Barker added. She called for a 0.5% interest rate cut in February with a further cut to 5% by the spring to avoid a prolonged and severe slowdown.
The survey showed that while some sectors, such as aerospace, remain buoyant, others, such as metal production, expect to see output slump.