LONDON, Oct 21 - Britain's manufacturing sector may finally be on the recovery road but it is too early to say that firms have turned the corner as total orders continue to fall, the Confederation of British Industry said on Tuesday. Releasing its quarterly industrial trends survey, the employers' group said Britain's manufacturers are becoming more optimistic about future prospects though total order books fell at the sharpest rate in more than four years in October. The survey's main business optimism balance rose to -7 in October, the highest level since July 2002, from -13 last quarter as firms stopped expecting new orders to keep falling for the first time in a year. "Evidence that optimism among manufacturers is less negative than in the spring suggests that the mood is lightening slightly, but previous expectations of improvement have been dashed several times over the last 18 months," said Ian McCafferty, the CBI's chief economic adviser.
"Overall, this is an encouraging survey but it is too early to say whether firms have really begun to turn the corner." The CBI said the Bank of England should not raise interest rates just yet as a hike in borrowing costs now could snuff out the incipient recovery. Indeed, the monthly survey showed that total orders fell at the fastest rate since January 1999, with the balance falling to -40 from -33 in September. But the quarterly orders balance showed some improvement, rising to -16 in October compared with -18 in July and the expectations balance for orders over the next three months rose to 0 from -8. Export orders continued to fall in October but at marginally weaker rate than in July. The CBI said that investment intentions remain negative but plans for plant and machinery are the highest in over a year. There has also been a rise in spending on training and retraining over the coming 12 months compared with last year.//