LONDON (ShareCast) - Manufacturing orders in the UK fell more than expected this month as home demand declined, according to the Confederation of British Industry's (CBI) Industrial Trends Survey on Tuesday.
The total order book balance in the CBI survey for April dropped to -25% from -15% in March - the lowest reading since October 2010. Analysts had forecast -14%.
"This quarter was a mixed bag for manufacturers, with new orders disappointing because of a decline in domestic demand, but output did increase," said CBI Director of Economics, Stephen Gifford.
"Although weaker sterling has eased concern about international competitiveness, manufacturers highlight the potentially chilling effect of political and economic instability abroad on export orders, such as the Cyprus crisis."
Employment in the sector increased in line with expectations in the three months to April (+10%), and manufacturers expect to increase their headcount in the next quarter.
Domestic price inflation was unchanged on the quarter, but growth in average unit costs was the highest since January 2012, squeezing manufacturers' profit margins again.
Looking ahead, output is also expected to rise and manufacturers' optimism has improved.
A balance of +18% of manufacturers anticipate total orders to increase in the next quarter, with +19% expecting export orders to rise and +8.0% predicting growth in domestic orders.