Firm export orders help lighten business gloom

Aug 4 2008 by Tony McDonough, Liverpool Daily Post

BUSINESS confidence is falling in the North West, although the manufacturing sector has reported an increase in orders during the last quarter.

The latest CBI/Experian Regional Trends Survey published reveals business confidence fell in every UK region during the second quarter of 2008.

However, while the outlook for the sector is fairly downbeat, firm export orders across the majority of regions has helped to limit the slowdown this quarter.

Lai Wah Co, CBI Head of Economic Analysis, said: “Manufacturing confidence has tumbled over the past quarter.

“The climb in oil and other raw material prices over recent months has driven costs up significantly. Although firms are having some success in passing these costs on, profit margins are under pressure.”

The volume of new orders received in the past three months was broadly unchanged at the national level for the second consecutive quarter.

Seven regions reported falls in total orders, led by the West Midlands, which suffered its largest fall since 1999, followed by the East Midlands. However, orders grew strongly in Northern Ireland, for the second survey in succession, while the North West reported a modest increase.

Peter Gutmann, of Experian, said: “Exports are helping to limit the slowdown in the manufacturing sector, boosted particularly by sterling’s weakness against the euro. However, the near-term outlook for manufacturing still looks tough as the economy enters a precarious phase.”

While the majority of regions reported falls in total orders, the opposite was true for export orders.

Seven out of 11 regions saw an increase in overseas demand this quarter.

Yorkshire and the Humber led the way reporting a firm rise in export orders, as it has done for the last four years, followed by Northern Ireland and Wales. Only two regions – the West Midlands and North East – saw a marked decline in export orders.

Average unit costs surged in the past three months as oil prices moved above $140 a barrel and other raw material costs came under further upward pressure.

The rise in unit costs was the sharpest at the UK level since the survey began in 1988 and in most regions – notably Yorkshire and the Humber, the North West and Scotland – the increase was sharper than in any previous quarter.

tonymcdonough