Manufacturing industry sees further decline in operations

The number of manufacturers operating below capacity has risen to a 20-year high, fuelled by a relentless two-year decline in orders and output.

The CBI&#39s Quarterly Industrial Trends survey, published yesterday, also shows manufacturers&#39 confidence dropping further as weak global demand threatens to keep the sector mired in recession.

It finds that 74% of firms are now working below capacity, the highest percentage recorded since January 1983. This follows two consecutive surveys where 67% of companies operated under capacity.

The survey says 31% of firms saw a fall in total orders in the four months to January, while 22% saw a rise. The balance of – 9% follows the -16% recorded in the October survey, and marks the eighth consecutive quarter of declining demand.

Output also fell and firms no longer expect any noticeable rise in either orders or output over the next four months. This follows three consecutive quarters in which expectations for rising demand and production were disappointed.

Overall optimism also fell, with 30% of firms less optimistic about the business situation than four months ago, and 11% more optimistic. The balance of -19% matches the figure recorded in October and compares with +4% in July.

Employment fell further than expected, with no sign of respite over the next four months. The CBI predicts 42,000 manufacturing job losses in the first quarter of 2003.