Manufacturing order books lunged lower in August, the Confederation of British Industry (CBI) said August 24, while slashing its forecasts for economic growth this year. The CBI said that 41% of firms reported total order books below normal in its monthly industrial trends survey, while 13% said they were above normal. The resulting negative reading of -29% was the worst figure since October 2003, and compared with -20% in July and analysts' forecasts of a modest improvement.
The employers' body also cut its annual gross domestic product (GDP) growth forecast to 1.9% from 2.5% previously -- well below British finance chief Gordon Brown's budget projection of between 3.0-3.5%.
Ian McCafferty, the CBI's chief economist, said the loss of momentum was likely to be enough to hold off inflation in the face of sky-high oil prices, meaning that interest rates may stay unchanged through to 2006.
Looking ahead, the CBI said it hopes the recent cut in British interest rates would underpin consumer and business confidence and allow the economy to gain momentum. Doug Godden, the CBI's head of economic analysis, added: "The various cost pressures facing manufacturers will continue to impede profitability in the sector and will have a knock-on effect on investment and jobs."
Copyright Agence France-Presse, 2005