Orders disappoint but output is up, says CBI

The CBI said the decrease in orders was driven by a fall in domestic demand this quarter, the fastest pace of decline since January 2012, whereas export orders stabilised. Employment in the sector increased in line with expectations over the three months and manufacturers expect to increase their headcount in the next quarter. CBI Director of Economics Stephen Gifford (pictured) said the quarter was "a mixed bag for manufacturers". He continued: "Firms are expecting to ramp up production in the coming quarter on the back of an expected rise in new orders. "Although weaker sterling has eased concern about international competitiveness, manufacturers highlight the potentially chilling effect of political and economic instability abroad on export orders, such as the Cyprus crisis." James Buckle, Global Corporates manufacturing team at Lloyds Bank Commercial Banking added: "While the increase in output is welcome, inflationary pressures on unit costs and poor domestic orders continue to pose a challenge for the prospects of the UK manufacturing sector. "Given the sustained fall in domestic demand, it is important for UK manufacturers to continue redirecting output towards higher growth markets, but this may take some time. Effective risk management against exchange rate volatility and associated input costs will continue to be of paramount importance to the sector."