Business confidence tumbles across UK
Business confidence has fallen in every region of the UK, according to lobby group the Confederation of British Industry, with cost pressures intensifying and manufacturing activity slowing.
Downturn: Manufacturing has slumped
While the outlook for the manufacturing sector is pretty gloomy, it has been boosted by firmer export orders across the majority of regions in the last three months.
Lai Wah Co, head of economic analysis at the CBI, 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.'
Manufacturers fuelled fears of a recession last week after a survey from the Chartered Institute of Purchasing and Supply showed activity in the sector falling at its fastest pace for nearly a decade during July.
Firms faced a 'dangerous combination' of worsening market conditions and record cost inflations, CIPS said.
The latest quarterly CBI/Experian survey shows the volume of new orders received 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 biggest fall since 1999, followed by the East Midlands. Orders grew strongly in Northern Ireland, with the North West scoring a modest increase.
While the majority of regions reported falls in total orders, the opposite was true for export orders. Seven out of eleven regions notched up increases in overseas demand in the quarter. Only two regions - the West Midlands and the North East - saw a marked decline in exports.
However, looking ahead to the next quarter, all regions expect total orders to fall.
Two of them, the West Midlands and Scotland, are extremely downbeat, with their most pessimistic expectations since 1998 and 2001 respectively.
The data will be closely watched by members of the Bank of England's rate-setting monetary policy committee, which meets this week.
Analysts expect policymakers to hold interest rates at 5%.
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