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26 January 2012 08:04
business confidence
Business confidence takes a dip, says new survey
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Ian McCafferty of the CBI
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Business confidence has been hit by stagnant output, falling demand and concerns over exports during the last quarter, according to a survey by the Confederation of British Industry.
However, a slight rise in export orders and modest growth in output are expected in the next three months.
In the next three months, manufacturers expect output to rise modestly. However, the latest result was affected by sharp swings in production in the chemicals sector. If chemicals production were excluded, the extent of both the downturn and the rebound would be less pronounced.
Broader conditions in the manufacturing sector remain fragile.Domestic and export orders both fell for the first time in two years, with exports in the worsdt position since autumn 2009 – but in a sign that fears over global demand are beginning to ease, firms expect to see a slight rise in export orders and a levelling out of domestic orders in the coming quarter.
Sentiment about the general business situation and export prospects fell sharply for the third consecutive quarter. Alongside falling demand, confidence was hit by growing concern over political and economic conditions abroad.
John Cridland, CBI Director-General, said:
“We know that 2012 will be not be an easy year. The watchword continues to be uncertainty. The crisis in the Eurozone is still hanging over the UK, threatening future growth. With large amounts of peripheral countries’ debt maturing in the coming months, Eurozone stability is far from assured.
“Nevertheless, within this survey there are some tentative signs that things could improve somewhat in the coming quarter. Key factors behind this include the fact that the US recovery has been better than expected, and the impact of the credit rating downgrades in the Euro area has been muted.”
Ian McCafferty, CBI Chief Economic Adviser, said: “It is clear from this survey that conditions in UK manufacturing remain fragile. However, the steepness of the slowdown in growth this quarter was partly caused by the specific issue of destocking further up the chemicals supply chain, and the instant impact on output in the sector.
“While the acute fears seen at the end of last year over global demand may be subsiding, 2012 will prove to be a difficult year for UK manufacturing, as the crisis in the Eurozone – our biggest export market – has yet to reach any definitive resolution.”
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