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UK manufacturers expect to slash factory output in the coming months as orders for March fell at their sharpest rate in 17 years.

Business group the Confederation of British Industry issued a dire forecast today in which it said that output levels were likely to mark the weakest demand for UK manufactured goods since the last recession in January 1992.

When the 558 manufacturers that completed the survey were asked about expectations for output volumes over the next quarter, the response equalled a record low of 48 per cent. The last time the manufacturing industry expected output to drop by that amount was back in September 2008, said the CBI.

Companies expect to cut output sharply over the next three months with expectations of a manufacturing decline rising to 48 per cent from 44 per cent in February.

It said 58 per cent of respondents confirmed their total order book balance in March was below normal levels, down slightly compared to 56 per cent in the previous month.

However, the CBI said that while price falls were expected to hit the capital and intermediate goods sectors, it forecast consumer goods vendors would hold their prices over the next three months.

"The past six months have proved especially tough for many UK manufacturers, who have been hit by plunging domestic and global demand,” said the CBI’s chief economic adviser Ian McCafferty.

"Although firms have cut output aggressively in response to the recession, stock levels are still too high relative to expected demand.

"Manufacturers will take further action to reduce their stocks, leading to further sharp falls in output over the coming quarter." ®

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