Hard-pressed manufacturers have been hit by weak demand for a fifth successive year, the CBI said today.
The CBI’s latest industrial trends survey marks an unhappy anniversary for the sector, the sixtieth month where a balance of firms said orders were below normal.
44% of firms said total orders were below normal this month, 13% said they were above. The balance of minus 31% compares with minus 25% last month and minus 32% in December. A balance of firms have now been reporting below-normal orders since February 1998.
Conditions overseas play an important part in explaining recent manufacturing weakness. Export orders remain well below normal, with a balance of minus 34% comparing with minus 38% last month and minus 33% in December. A balance of firms have now recorded below-normal export orders for a seventh successive year.
Firms expect output to stagnate over the next quarter, for the fourth consecutive survey. Output expectations have been pulled back to early-2002 levels by persistently weak orders.
Stocks have fallen to late-2002 levels, but firms still say they are more than adequate to meet demand. A balance of plus 15% compares with plus 20% last month.
Firms expect prices to fall more sharply over the next four months, increasing the pressure on profit margins.
Doug Godden, CBI Head of Economic Analysis, said: ‘This unhappy anniversary for manufacturers marks the fifth year of weak demand. The sector has not enjoyed a sustained period of rising orders since the mid-90’s.
‘Though struggling under immense pressure, the manufacturing sector remains vital to the health of the economy. Many UK regions and much of the service sector depend heavily on the work of manufacturers, and the sector accounts for a significant proportion of UK export income.
‘Firms will now be hoping that this month’s interest rate cut will offer some relief, but what the beleaguered sector really needs is a pick-up in global demand.’
Note: The Monthly Industrial Trends survey was carried out between 22 January and 12 February 2003 and 1042 manufacturers responded.