Manufacturing prospects 'worsen'

Cautious consumers mean tougher times for manufacturers

Conditions for UK manufacturers are worsening, according to a CBI survey, with expectations for output over the next quarter at a seven-year low.

A third of the 600 firms questioned in the survey expect production to fall in the next three months, the worst outlook since the end of 2001.

The prospects for exporters are better although the CBI warned the slowing eurozone economy was affecting demand.

The British Chambers of Commerce has warned of an imminent recession.

It expects the economy either to stagnate or contract over the next six to nine months.

'Sluggish' demand

The CBI is slightly more optimistic although it is currently predicting growth of 1.3% next year, down from this year's 1.7% forecast.

The employers' body said recent falls in the value of sterling against the euro had helped exporters but that demand in the UK remained "sluggish".

"Manufacturers are becoming more downbeat about forthcoming levels of activity but are still having to raise their prices due to the severity of recent cost increases," said the CBI's chief economic adviser, Ian McCafferty.

The outlook for manufacturers further worsened in August, the CBI's research found, having turned negative in July for the first time in more than two years.