Manufacturing sector shows first signs of recovery

The
manufacturing sector is showing the first signs of recovery, but the decline in
orders, output and employment continued over the past four months, according to
the CBI.

The
CBI’s Quarterly Industrial Trends Survey found that business confidence has
risen for the first time in more than two years, indicating the first signs of
recovery from recession.

But
the CBI believes the turnaround in sentiment is driven by expected improvements
in global trading conditions. Firms expect export orders to grow over the next
four months for the first time since January last year. Domestic orders are
also expected to grow and if achieved, it will be the first increase since
January 2000.

Ian
McCafferty, CBI chief economic adviser said: "The deepest manufacturing
recession for over a decade appears to be on the turn. Expectations of small
rises in orders and output have led to manufacturers becoming significantly
more optimistic.

"This
is good news but any recovery at this stage will remain fragile. It will be
some time before manufacturing job numbers stop falling and firms start
investing again."

Job
losses continued at a similar rate as in the January survey. The trend is set
to continue over the coming months, adding to the half million manufacturing
jobs lost over the past four years.

Mr
McCafferty said: "It is worth noting that the survey period was completed
prior to the Budget, which added to employment costs for businesses of all
sectors and sizes, regardless of their profitability. We cannot be sure that
recorded optimism would have bounced back in this way, had manufacturers known
what was in store."

By Quentin Reade

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