CBI survey points to weakness

A new survey of manufacturers has shown output expectations falling to the lowest level since the start of the year, exacerbating fears that the economy is once again contracting.

Just 19 per cent of the 409 respondents to the November CBI Industrial Trends survey expected to increase output over the next three months, while 28 per cent expected it to decline. The resulting minus 9 per cent balance is the lowest level since the beginning of 2012, and well below the survey's long-run average of 6 per cent. "It seems likely manufacturing will drag on GDP in Q4, possibly contributing to a 'triple-dip'," said Samuel Tombs of Capital Economics.

However there was a slight improvement in export orders, with the balance rising from minus 22 per cent to minus 12 per cent. The CBI said that the improvement was a result of an increase in orders for cars, mechanical engineering, food, drink and tobacco.

The economy grew by 1 per cent in the third quarter of 2012, ending a six-month recession. But other surveys of purchasing managers have shown a weakening since then, and the Bank of England has warned the economy could contract again in the fourth quarter of the year. The Office for National Statistics will publish its estimate for fourth-quarter growth in January.