The outlook for manufacturers is the “least negative” since the summer of 2008, according to the latest Confederation of British Industry’s Industrial Trends Survey released yesterday.
The nationwide poll of 560 companies showed they had endured another tough time in July but following months of destocking, their outlook for production over the next three months is the best since last June.
Chris Clifford, the CBI’s regional director in the West Midlands, said: “I think there some encouraging signs, but I am not brave enough to call them green shoots. It is still all very tentative and unpredictable out there.
“In certain sectors, there are some hopes that we have reached the bottom and that things are beginning to turn.”
Mr Clifford cited economic concerns and political uncertainty as possible restraints on a strong recovery in the coming months, as well as the fact that manufacturers still face problems in accessing credit and credit insurance.
Of the manufacturers who took part in the CBI Industrial Trends Survey, 32 per cent said they expected the volume of output to fall over the next three months, while 27 per cent said it should increase. Although the resulting balance of minus five per cent represents a slight fall in output, it is the least negative prediction since June 2008 ( plus two per cent).
However, demand remains very weak with a balance of 54 per cent of manufacturers reporting that total order books are below normal. This was a slight improvement on July’s 17-year low (minus 59 per cent) but marked the seventh consecutive month that orders have remained significantly below par.
Export order book levels have also remained feeble, despite the relative weakness of sterling, with a balance of 48 per cent reporting them below normal.
CBI director-general Richard Lambert said: “Manufacturers are facing weak demand at home and abroad and their order books continue to look anaemic.
“More positively, expectations for manufacturing output over the coming three months are the least negative in over a year. This is partly because many firms have run down stock levels quite aggressively over the summer, so some manufacturers are now looking to raise production. It looks like destocking in the manufacturing sector may be coming to an end, which offers a further sign that the economy is starting to stabilise.”
Following heavy destocking over the past few months, a balance of 13 per cent of firms said that stocks are more than adequate to meet demand and stocks now stand at their most moderate level since July 2008.
Manufacturers are still expecting to lower domestic prices over the next quarter, but the pace of these anticipated price falls (a balance of minus ten per cent) has eased slightly from July (minus 17 per cent).
