–UK BCC: Q3 Manufacturing Home Orders Balance -4% Vs +9% Q2
–UK BCC: Q3 Manufacturing Home Sales +3% vs +18% Q2
–UK BCC: Q3 Manufacturing Export Sales +18% vs +26% Q2
–UK BCC: Q3 Services Home Sales 0% vs +10% in Q2
–UK BCC: Q3 Services Home Orders -3% vs +9% in Q2
–UK BCC: Q3 Confidence, Investment, Hiring Intentions Deteriorate
–UK BCC: Negative Home Orders Balance Points To Recession Risk

LONDON (MNI) – The UK economy showed signs of further economic
deterioration and even stagnation through Q3, the British Chambers of
Commerce’s latest Economic Survey showed.

The survey shows that while many balances are still in positive
territory, indicating growth, this is weaker than in previous quarters
and home orders have dropped into negative territory. Figures for the
domestic market, exports, business confidence, cashflow, and investment
in plant and machinery all weakened over the last quarter.

The Q3 QES shows that cashflow remains a real concern for
businesses. The survey also shows disappointing balances for exports,
and for investment in plant and machinery, suggesting that the
much-needed rebalancing of the UK economy is not yet occurring.

Domestic balances in the Q3 survey also show minimal growth or
stagnation, with declines in both manufacturing and services.

The manufacturing balance for home deliveries fell to +3% (from
+18%) the lowest since Q1 2010, and in services to 0%, from +10%.
For forward-looking home orders, in manufacturing the balance fell 13
points to -4%, the worst level since Q4 2009, and in services dropped 12
points to -3%, the worst level since Q4 2010.

For both manufacturing and service sectors export balances worsened
in Q3. While they remain in positive territory, export sales for the
last three months fell eight points in manufacturing (to +18%), and by
14 points in services (to +4%). Asked about future orders, the export
orders balance for manufacturing was the worst level since Q3 2009 (down
eight points to +14%).

In the service sector, businesses reported a contraction, with a
balance of -2% (down 18 points, the weakest level since Q2 2009).

Figures for the last three months showed a fall in the balance of
manufacturers expanding their workforce, and in services there was only
a marginal increase. Firms in both sectors do not seem to be much more
optimistic about future recruitment. In manufacturing the employment
expectations balance was down five points to +10%, and in services down
six points to +6%.

BCC said that businesses are still facing real difficulties in
managing cashflow and, despite balances falling since the last quarter,
businesses’ intentions to raise prices are still relatively high (likely
due to rising raw material costs). The balance of manufacturing firms
reporting pressure to increase prices fell seven points, to +31%, and in
services fell five points, to +22%.

Confidence among manufacturers fell in the last quarter. The
balance measuring manufacturers’ confidence in turnover fell by seven
points (to +33%), and in profitability the balance was down six points
to 16%.

In the service sector, the turnover confidence balance fell six
points to 24%, and profitability confidence stayed unchanged, at +10%,
still a disappointingly weak level. In both sectors, the level of
confidence in turnover and profitability is inadequate. While both
service sector and manufacturing businesses intend to invest slightly
more in training, investment in plant machinery fell in both sectors.

Commenting on the results, John Longworth, Director General of the
BCC, said:

“Businesses need continuous reassurance that there is a plan for
fiscal stability and a clear road map which will steer us towards a
strong recovery. Government must recognize that business is good for
Britain, and put in place measures to bolster confidence and support
those companies that have the potential to grow. That includes a
commitment to a Plan A+ for growth, with alternative paths at the ready
in case of further shocks from foreign shores.”

David Kern, BCC Chief Economist, said:

“The forward-looking home order balances moved into negative
territory, for both manufacturing and services, pointing to risks of
recession. Although recession can be avoided, on the basis of these
results our growth forecasts issued early in September will likely be
revised downwards for both 2011 and 2012″.

–London newsroom: 00 44 20 7862 7492; email: dthomas@marketnews.com

[TOPICS: MABDS$,M$B$$$]