Manufacturers losing the feel good factor, CBI finds

The CBI said that with growth in total orders and production easing slightly in the last three months, manufacturers expect a further deceleration over the next quarter. As a result, after successive increases in employment, they plan to cut jobs over the next three months and have revised down their investment plans for the year ahead. Responding to the CBI's July Quarterly Industrial Trends Survey, manufacturers reported that they were less optimistic than three months ago, the first fall in sentiment since July 2009. Of the survey's 445 respondents, a third said they saw an increase in the total volume of new orders, and a quarter said they had fallen. Nevertheless, factory output continued to grow at a pace above the long-run average although this was again slower than the strong expansion over the past year. Over the next three months, a more marked easing in activity is anticipated, with orders expected to be unchanged and production expected to rise more modestly. CBI chief economic adviser Ian McCafferty (pictured), said the outlook was influenced by supply chains around the world being impacted by the Japanese tsunami and by concerns over the euro crisis, and the squabbling over the US debt ceiling. "However, this slowdown is expected to persist into the third quarter," he concluded, adding that the combination of political and economic uncertainty was sapping confidence. Robin Johnson, partner and head of the industrial engineering group at the law firm Eversheds pointed to anecdotal evidence that exports remained firm with SMEs and mid-level businesses remaining relatively protected in core industries such as automotive, aerospace and IT supply. "The UK manufacturing industry has moved on from the recession. Funding remains tight but on the whole the view from manufacturers is that if export growth is thrown into the mix, it can weather the storm whilst awaiting the expected uplift in government spending in 2013," he added.