Faltering domestic demand drives down
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Manufacturing News, Source : TheManufacturer.com
Published : 23 Sep 2002 9:37
Weakening domestic demand has driven down order books to a six-month low, according to a CBI survey.
In the latest monthly Industrial Trends Survey, 40 per cent of respondents said total orders were below normal, 11 per cent said they were above. The balance of minus 29 per cent compares with minus 24 per cent in August. Export orders also remain well below normal.
Following the destocking of the summer, stock levels rose this month with firms saying they are again more than adequate to meet demand.
Falling demand and rising stocks have caused manufacturers to scale back output projections for the coming four months. Thirty one per cent of firms thought output would be up over the next four months, 24 per cent thought it would be down. The balance of plus seven per cent contrasts with August's two-and-a-half-year high of plus 16 per cent.
Small and medium-size manufacturers reported the most significant weakening of demand, but orders were below normal for firms of all sizes.
Companies producing capital goods - such as factory equipment - recorded much weaker demand than firms providing consumer goods - such as food, drink and tobacco - and producers of components, such as textiles and plastics.
Ian McCafferty, CBI Chief Economic Adviser, said: "The protracted manufacturing recovery is stuttering. Domestic demand has faltered and modest expectations of short-term recovery have been cut back for the second time this year. Uncertain global trading conditions and rising oil prices continue to be thorns in the side of the economic recovery."
The survey shows downward pressure on prices remains intense. The pace of decline in average prices is expected to intensify over the next four months, with the balance of firms expecting to cut prices falling to minus 13 per cent following three months unchanged at minus 10 per cent.
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