Factory order slump is less than forecast

Published on Friday 15 December 2006 12:55

FACTORY orders in the UK fell by less than expected in December - but foreign orders slipped as the strong pound hit demand for British goods, according to a CBI report.

The business group said its monthly manufacturing order books balance improved to minus-five in December from minus-six in November, matching a 21-month high hit in September and beating analysts' forecasts for a reading of minus-seven.

However, export orders fell to minus-five in December from plus-three last month, which had been the highest reading since August 1995.

"The recent sharp rises in the value of the pound against the dollar are clearly affecting export order books," said Ian McCafferty, CBI chief economic adviser.

During the time when the survey was conducted - between November 21 and December 6 - the pound hit a 14-year high against the dollar and a six-year high on a trade-weighted basis.

Manufacturers were expected to raise output in coming months, with the output expectations balance rising to plus-11 from plus-five in November.