Strong international demand for British-made goods drove growth in new orders in most UK regions for the fifth quarter in a row, according to the latest quarterly regional trends survey published today by the Confederation of British Industry and Experian, the credit reporting company.
Expectations for output in the next three months are defying fears of an economic slowdown, with most regions expecting output to increase, led by Scotland and the West Midlands.
Lai Wah Co, the CBI's principal economist, said: "Though manufacturers' confidence is undoubtedly suffering, demand - especially from overseas - is holding up better than expected in most regions."
Peter Gutmann of Experian said: "The survey results provide some encouragement at a testing time. Most regions are quite upbeat about orders and exports for the next three months.
"Perhaps manufacturers are pinning their hopes on the boost to UK competitiveness from sterling's near-10% depreciation against the euro since November as an offset to slower growth in the eurozone."
Employment at the UK level contracted in the past quarter at a faster pace than in the previous six months, but Scotland and north-west England bucked the trend. Both reported an increase in employment, boosted by strong job creation in the food, drink and tobacco sub-sector.
The strongest export gains were seen in Yorkshire and the Humber, Wales and the East Midlands.
Reflecting the economic uncertainty both in the UK and overseas, every region reported a decline in general business confidence.
Input costs have increased markedly in every region across the UK over the past three months. However, apart from in Wales, manufacturers were able to push through domestic price rises to help mitigate the squeeze on profit margins.
Investment intentions in plant and machinery remain subdued, with only two regions expect to increase capital expenditure in the year ahead.
The regions with the most depressed investment outlook are Northern Ireland, the south-east and London, and the east of England.
According to CBI/Experian estimates based on the survey results, 13,000 manufacturing jobs were lost at the UK level in the last quarter of 2007, and 24,000 will be lost in the first quarter of 2008, with south-west England seeing the largest fall.
Lai Wah Co said: "Rapid rises in oil, commodity and food prices are driving ever-increasing input costs for manufacturers. However, most UK regions still feel able to raise their prices to help ease the pressure on profit margins."
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