Orders rebound but manufacturers predict a flat start to 2013

Fewer than one in five reported that total order books were above normal while almost one third said that they were below. And while last month's rebound in export orders held, there was no further improvement in overseas business. Looking ahead, the balance of manufacturers still expect output to be flat for the next three months and although they are a little more optimistic than last month, growth is still below the robust glevel that was anticipated back in October. Investment goods sectors – especially mechanical engineering and aerospace – are the main drivers of growth, but half of the 12 main manufacturing sub-sectors expect output to fall, including chemicals and electrical engineering. Meanwhile expectations of output price inflation over the next three months picked up with all but two of the 11 manufacturing sectors reporting an increase. This is the highest anticipated rate of inflation since March. The food, drink & tobacco sector is the largest driver of the increased inflation expectations by some distance. Anna Leach, CBI head of economic analysis, said: "December's survey reports a welcome improvement in manufacturers' order books and their expectations for output. Even so, they remain hesitant in predicting further output growth and are keeping stock levels low. Conditions in the sector and the wider economy are likely to remain fragile until global conditions improve over the course of 2013."