The worsening economic outlook has dented manufacturers’ confidence in the South East over the last three months, according to the latest Regional Trends Survey from the CBI and Experian.

At a national level, the volume of total new orders was stable over the past quarter, but total new orders fell in the South East.

Malcolm Hyde, CBI South East Regional Director, said: “The story in the South East is of falling demand, shrinking output and declining jobs. The slowdown underway in other parts of the economy is now being felt in the manufacturing sector.

“The survey suggests that the pound’s 14 per cent depreciation against the euro over the past year is helping to support manufacturing exports, at a time when eurozone growth is faltering. This is the one bright spot in a fairly downbeat picture. Without this boost, manufacturers would be facing even tougher conditions in the coming months.”

Helped by the weaker pound, manufacturers saw an improvement in exports from the South East and slightly positive expectations for total new orders over the next three months have been helped by these exports.
Expectations for output are generally gloomy - particularly in the South of the country, which includes the South West, London and the East of England, which all expect marked falls in output in the next three months.

Manufacturers across all of the regions experienced sharp rises in unit costs - driven by more expensive energy and raw materials - and in many cases these were the steepest since the early 1990s.

In an attempt to counter the impact on their profit margins, firms in most regions said they had raised prices.

Nationally, employment continued to fall over the quarter, in line with the long-term trend. The southern regions - East of England, the South East & London and the South West - all reported significant job losses.

According to CBI\Experian estimates based on the survey results, 18,000 manufacturing jobs will be lost in the second quarter of this year. The brunt of this will, again, be felt across the South - the largest job cuts in absolute terms (5,000) are expected in the South East & London, whilst the largest percentage fall (1.2 per cent) is expected in the South West.

Investment intentions remain subdued. In several regions there are expectations of much reduced expenditure on buildings and plant & machinery in the coming 12 months. The regions with the weakest investment outlooks are Northern Ireland and the South West.

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