27 January 2004 16:04 [Source: ICIS news]
LONDON (CNI)--The UK chemicals sector has become more optimistic over short-term prospects, with a larger number of firms forecasting increased production in the next three months, according to the Confederation of British Industry (CBI) latest monthly survey published Tuesday.
The CBI survey showed that 42% of chemical company respondents expected output to rise over the next three months - a significant rise on the 26% recorded in December.
Today's report added that the level of respondents expecting production to remain the same was 53%, compared with 66% last time. Only 4% of respondents felt that output might fall against 8% a month ago.
There was a significant disparity, however, between the expected trend for domestic and export delivery volumes over the next three months.
About 55% of respondents forecast that domestic deliveries (by volume) would be the same as the last three months. However, only 24% thought the export delivery trend would be unchanged. Some 40% expected domestic deliveries to rise in the next three months against 58% for exports. Only 5% thought that domestic deliveries would fall in the first quarter compared with 18% for exports.
However, most respondents expected the average price at which domestic orders are booked to fall. Some 51% predicted a drop, up from 18% last time. Only 3% expected prices to rise – a fifth of the rate of last time. Some 46% expected prices to remain the same, compared with 67% in December.
The outlook for current chemicals order books was broadly similar to December. Some 60% of survey respondents viewed their orders as normal, up only marginally from 59% last month. About 18% said their orders were above normal, down from 21% last time. And around 22% considered their orders as below normal, up from 20% last time.
Most export order books, however, are below normal or normal. Some 36% of respondents put their order books below normal, 34% said they were normal, and only 30% described them as above normal. The corresponding responses for December's survey were not available.
For the entire manufacturing sector, the CBI said it saw the strongest growth in total orders for over seven years and the strongest output growth for over eight years. It declared that the manufacturing downturn was over.
Ian McCafferty, CBI’s chief economic adviser, said in a statement: "The manufacturing sector is at last on a path to recovery and firms clearly believe the worst is behind them. Trading conditions have improved across the board, with orders and output accelerating sharply and uncertainty diminishing.”
He added: “The recovery now depends on the positive expectations for the coming quarter being realised, so manufacturers will be hoping that the Bank of England (BoE) continues its gradualist approach to raising interest rates."
The CBI survey was carried out between 11 December and 14 January, and 828 manufacturers responded.
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