UK Factory orders fell a much weaker than expected rate in February. This numbers make manufacturers predict modest output growth over the next months. The Confederation of British Industry (CBI) said 18% of manufacturers reported order books above normal while 36% said they were below - leaving a balance of -18 in February followed by a reading of -28 in January. These figures were much better than the -26 expected by many analysts. The CBI added that the positive outlook for production has also been helped by a run-down in stocks of finished goods, levels of which are now just below the survey's historical average.
''This survey provides some encouraging news,'' said Ian McCafferty, chief economic advisor at the CBI. ''Demand conditions facing the sector are the best for nearly a year and if respondents' expectations are realised, the decline in output through 2005 may finally be coming to an end,'' he added.
On the trading pits, it has been not many reaction to these numbers. ''We expect sterling to underperform this year, so even though both stories we got from the UK today were positive, the market is not convinced yet,'' said Marios Maratheftis, currency strategist at Standard Chartered.