11 October 2001, 14:30  BCC survey shows sharp fall in UK manufacturing orders

LONDON (MktNews) - UK manufacturing orders fell sharply in the third quarter, while growth in the service sector also declined, according to the latest quarterly economic survey from the British Chambers of Commerce published Thursday.
The manufacturing home orders balance fell to -12 in Q3, down from -5 in the previous quarter. Export orders suffered a heavier decline, with the balance dropping to -21 in Q3 from 1 in Q2.
Sales in the manufacturing sector also fell, with the balance of home sales dropping to -3 in Q3 from -1 in the previous quarter. Export sales contracted sharply, to minus 16 from 1.
Confidence in the manufacturing sector also continued to decline in Q3 after dropping significantly in Q2. The balance of companies expecting rising turnover over the next 12 months fell in Q3 to 28 from 32 in Q1. Confidence in the service sector also eased, with the balance here at 44 in Q3, compared with 49 in Q2.
"Manufacturing needs some intensive care, and while the Bank of England's recent cuts in interest rates offered the right kind of medicine, it may not yet be enough to bring the sector back to health," David Lennan, director general of the BCC said.
The survey also revealed a slowdown in service sector growth, with the home sales balance falling to 23 from 26 in Q2. Orders in the service sector also dropped to 14 from 19. Service sector exports fared better than those in manufacturing, with the sales balance slipping only slightly to 1 in Q3 from 3 in Q2 and the orders balance remained unchanged at 1.
Employment in both the manufacturing and service sectors is expected over the coming three months. For manufacturing, the employment balance declined to -3 in Q3 from 2 in Q2. In the service sector, the expected employment balance dropped to 16 from 22 in Q2. Over the past 3 months employment in services picked up slightly, with the balance rising from 15 to 16 in Q3.
The BCC survey highlighted the continuing decline of the UK's manufacturing base, accompanied by a more gentle slowdown in the service sector that has been the motor of economic growth. Things are unlikely to improve in the near future, with the BCC noting most of the survey responses were collected prior to the September 11 terrorist attacks on the US.

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