Output expectations remain weak - CBI

The survey, which records the perceptions of manufacturers, suggests that home and overseas orders continue to be hit by the global economic slowdown, with order book levels reckoned to be no better than in October, the weakest for five years. In a rapid turnaround from four months ago, however, manufacturers' output prices are no longer expected to rise. Sixteen per cent say their total order book is above normal, while 53% say it is below normal, giving a rounded balance of -38%. Last month’s figure (a balance of -39%) was the lowest since October 2003. Export order books also reflect the overall slowdown. Weak demand means manufacturers' inventories have built up to their highest level since December 2001, while output expectations are their lowest since 1980. And manufacturers do not expect to be able to raise prices in the next three months. The CBI’s chief economic adviser Ian McCafferty (pictured) said: "The outlook for manufacturers has deteriorated considerably since the banking crisis took a turn for the worse in October. Expectations for output are now the gloomiest in 28 years, while firms’ order books remain weak. With a sharper and more prolonged UK recession in prospect, conditions are going to remain tough for some time. A slowing global economy, particularly in the eurozone, makes the immediate benefits of a weak pound fairly muted for exporters. But the weakening in factory gate prices will feed through to declining inflation in coming months, giving the Bank of England room for further significant rate cuts."