BRITISH manufacturers' output expectations for the next three months are the weakest for seven years, the latest CBI Industrial Trends Survey has revealed.
While 20 per cent of firms in this month's survey expect their volume of output will increase in the coming quarter, 33 per cent are forecasting that it will fall.
The CBI said the balance of minus 13 per cent is the weakest measure since December
2001, when the figure stood at minus 28 per cent.
Demand for manufactured goods weakened for a second month after signs of improvement earlier in the summer.
A net 13 per cent of manufacturers judged total order book levels to be "below normal", matching April's 18-month low figure.
Firms' perception of export orders was less negative, indicating external demand is holding up somewhat better, the CBI said, though this month's balance of minus 9 per cent is the lowest since May.
A balance of 31 per cent of manufacturers expect prices will rise in the coming three months, slightly lower than the 13-year high recorded in July, but consistent with continued intense pressure on prices.
The CBI added that, after a long period of steep cost increases, cost pressures from food and other commodities are still having an impact, despite recent falls in oil prices.
Ian McCafferty, the CBI's chief economic adviser, said: "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.
"Domestic conditions remain sluggish and the recent slowdown in the eurozone economies is starting to make conditions tougher for UK manufacturing exporters, although the weaker pound will offer some relief."
The most recent CBI economic forecast, published in June, predicted that UK gross domestic product growth would slow from 1.7 per cent this year to 1.3 per cent in 2009.
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