Britain's manufacturing recovery stumbled in September as weaker exports dragged companies' order books off their best level in six-years, a Confederation of British Industry survey showed on Thursday. The CBI monthly industrial trends survey's orders balance slipped to -6 in September from +2 in August, reflecting the difference between the 24 percent of firms saying their order books were below normal and the 18 percent saying they were above. Economists had expected an orders balance of -2, according to a recent poll. One year ago the orders balance was -33. The figures suggest that the manufacturing recovery remains fragile and follows two consecutive months of falling output according to official statistics. Manufacturing makes up less than one-fifth of the British economy. "Although order books weakened this month, the results compare favourably with the position over the past 10 years. However, profit margins will remain under pressure," sad Ian McCafferty, the CBI's chief economic adviser. The CBI said its export orders balance slipped to -14 in September from -8 in August, its lowest since February. This was largely due to the strength of the pound and softer growth in export markets, particularly the United States, in summer months, the CBI said.
While the figures are the latest in a series of weak UK economic data, they are not likely to alter the outlook for interest rates. Analysts still expect a quarter point rate hike from the Bank of England by year-end although some are wavering on their predictions. The CBI said that companies, faced with soaring input costs in the form of high oil prices and surging commodities prices, especially metals, were still struggling to put up prices. But the prices balance remained positive, falling to +7 in September from +11 in August. The output expectations balance also slipped in September, to +12 from +19 the month before. That came partly because companies have built up their stocks of goods significantly between August and September. The survey was conducted between August 26 and September 15. During that time, the pound averaged around $1.79. That compared with $1.83 in the August survey and well above $1.90 earlier this year.///www.reuters.com