Scaling back

Manufacturers have reined back their output expectations in the face of subdued demand, according to the latest CBI Monthly Industrial Trends Survey.

The strong output expectations of the previous survey have been disappointed as manufacturers have now scaled back their forecasts.

In the latest survey, 30% of companies expected output to rise over the next three months and 21% expected it to fall.

A balance of 9% falls well short of the balance of 19% recorded in the February survey. The main industry groups forecasting declines in output over the coming quarter are textiles and engineering firms.

Manufacturing orders slipped further below what firms consider to be normal over the past month. 33% of respondents said orders were below normal and 21% said they were above. The balance of -13% compares with -10% in the previous survey.

Export orders also remained well below normal over the past month. 31% of firms said export orders were below normal and 13% said they were above. A balance of -18% in this survey compares with -20% last month.

Price expectations for the coming quarter have been revised down, although only slightly. A balance of 9% in this survey compares with 11% in the previous survey and 19% in January.

CBI Chief Economic Adviser Ian McCafferty said: "Manufacturers are struggling to lift orders amid challenging economic conditions. Oil prices rose by a further 15% over the past month alone. The slow rate of output growth will not help prevent further job losses in a sector which has shed one million jobs since 1997. Demand has been subdued so far in 2005 and firms do not expect this to improve anytime soon."

Stocks edged upwards over the past month with 9% of firms saying stocks were more than adequate to meet demand. This compares with a balance 10% in February and  5%  in January.

Notes:The Monthly Industrial Trends survey was carried out between 23 February and 16 March 2005. 755 manufacturers responded.