Manufacturing still recovering despite dip in orders: CBI

Manufacturers' orders weakened slightly in June but not enough to suggest a threat to the sector's recovery, according to the CBI's Monthly Industrial Trends survey published today.

Firms said total order books were marginally below normal in June, having returned to normal levels in May. However, June's result was not sufficiently weak to indicate a marked change in the improving trend reported over the previous eight months, the CBI said.

The survey revealed that 22% of firms' order books were above normal, 28% said they were below. The negative balance of minus 6% compares with plus 1% in May.

Export orders remained broadly unchanged in June - only marginally more below normal than May, when the balance was at its least negative since February 1996. Twenty-three per cent of firms said export orders were above normal and 28% below. The negative balance of minus five compares with minus three last month.

Relative to May, firms expect output to moderate slightly over the next three months. But their expectations remain broadly in line with those of the previous three months and above the long-term average.

Capital goods manufacturers reported order books broadly normal for June, having been well above normal last month. Producers of consumer and intermediate goods continued to report orders below normal.

Ian McCafferty, CBI Chief Economic Adviser, said: "This latest snapshot of manufacturing suggests that the underlying trend of slow, steady improvement in orders and output is continuing, even though both weakened slightly relative to May.

"In general, manufacturers are benefitting from the improving conditions globally, but many continue to struggle with both the level of sterling and the impact of rising interest rates on their costs."

The survey was carried out between May 27 and June 16 and 828 manufacturers responded.

(gmcg)