Factory confidence grows

11 April 2012

Manufacturers are more positive about their prospects over the next three months than they have been at any stage since June 2008, the CBI said today.

But the employers' body warned that if this is an early sign of recovery — it is only a weak one.

The balance of manufacturers expecting their volumes to fall in the coming quarter still outweighs those expecting them to rise by 5%.

Richard Lambert, CBI director general, said: "Manufacturers are facing weak demand at home and abroad, and their order books continue to look anaemic."

The lukewarm news came as little relief to the stock market where leading shares followed declines in Asian markets overnight.

The FTSE 100 fell XX points to XXXX, with banks and mining shares leading the way down. The CBI said its survey indicated that after months of de-stocking there were at last signs of firms beginning to restock to a modest extent. Lambert said: "It looks like de-stocking in the manufacturing sector may be coming to an end which offers a sign the UK economy is stabilising."

Sentiment in the City however was not helped by a report from accounting firm KPMG which said losses at UK banks on bad debts will not peak before 2010 at the earliest, because of rising unemployment in the economy and falling house prices.

"Unemployment is not going to disappear any time in the near future," said David Sayer, global head of retail banking at KPMG.

"It is going to be one of the key factors driving provisions for the near term."

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