Factories weather more hard times

Manufacturing confidence declined in every region of the UK over the last three months for just the second time since 2003, while nationally, orders declined more severely than expected, new figures reveal.

Just three regions, Yorkshire & the Humber, the North West and Scotland, reported increases in new orders in the last quarter, the Confederation of British Industry's (CBI) latest quarterly regional trends survey confirms, undermining confidence in an industry that some market observers had tipped for recovery.

A weak domestic market sharply drove down total orders for the nation's factories, the CBI said.

Export orders were also down nationally, though regional performances were mixed. The South West, North West and Yorkshire & the Humber posted the UK's only increases, while export orders stabilised in Scotland and the East Midlands.

Output plunged in the last quarter after stabilising in the previous survey. Only Scotland and the East Midlands reported increases, as the rest of the nation's factories weathered poor performances in chemicals, textiles, metal manufacture and engineering.

The industry also continued to shed jobs over the last three months, though it occurred at its slowest rate in a year. Most employers, however, said they expect to make further cuts to their workforce in response to the weakening output and order books.

According to Experian, which published the survey with the CBI, a further 22,000 jobs are expected to be cut nationally in the current quarter, particularly in the West Midlands, South East and London.

"The poor performance of manufacturing in the third quarter reflected a combination of weak domestic and external demand," said Dimitri Gunawardena, economist at Experian.

"However, the survey suggests that domestic weakness was chiefly responsible. Whereas some regions reported an upturn in export orders, which have recently been boosted by a slight improvement in the key eurozone market, the widespread and sharp decline in domestic orders is worrying."