LONDON, July 22 - UK manufacturing confidence picked up to its highest level in a year in July as global uncertainty caused by the war with Iraq eased, but order books continued to slide, the Confederation of British Industry said on Tuesday. The CBI's Quarterly Industrial Trends survey's main business confidence balance rebounded to -13 in July from -27 in April as firms grew more optimistic now that the war in Iraq was over. This was the highest level since July last year when the balance stood at +4.
However, domestic orders fell faster than expected over the last three months and export orders fell at their fastest pace in a year and a half despite a weakening pound. As a result total orders continued to fall although at a slower pace after recording their worst slide in four years in April. The balance rose to -18 from -21 in April. The CBI's monthly orders balance deteriorated to -37 in July from -27 in June, the worst since January 1999 when the figure plunged to -43. "Manufacturers have enjoyed little relief in the three months following the end of conflict in Iraq and the downturn in orders appears relentless despite the recent softening of the pound," said Ian McCafferty, CBI chief economic adviser.
He said this month's interest rate cut by the Bank of England to a 48-year low of 3.5 percent had been timely "but we may need more in interest rates to support the economy at this challenging time." The gloom in manufacturing sector continued to impact jobs. A balance of 24 percent of around 900 firms surveyed said they had cut employment levels in the last three months. This was slightly up from a balance of 26 in April. The CBI has changed its questions to cover the three-month period prior and following the survey from a four-month period previously. It claimed the back data had not been affected.//