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Ash4781

Factory Orders Fall At Fastest Rate In 17 Years

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http://business.timesonline.co.uk/tol/busi...icle6722958.ece

British factories suffered a bigger-than-expected drop in orders this month raising new fears about the health of the economy.

In July, manufacturing orders fell at their fastest rate since January 1992, according to the Confederation of British Industry (CBI).

The CBI's gauge of orders dropped from -51 to -59, far below the -45 measure expected.

However, there was some good news as factories indicated that the business environment had improved over the past three months, with the balance rising to -16, the highest since October 2007.

There was also a slowdown in the pace of decline of overall output. Some 43 per cent of businesses said output had declined in the three months to July, while just 12 per cent said their output rose. The resulting balance of -31 indicates that output is still falling, but at a slower rate than in the three months to June when the balance was -53.

Ian McCafferty, chief economic adviser to the CBI, said that the gloomy figures from the manufacturing sector, which accounts for about a sixth of the country's total output, underlined that the country faced difficulties in the wake of the downturn: “These figures reinforce our view that the road out of recession will be long and slow," he said.

“The further sharp decline in export orders is of particular concern as we are not seeing much of a boost from the relative weakness of sterling. There are also further indications that the inventory cycle may not be turning as quickly as many had hoped.†The measure of export orders picked up only marginally to -45 from -52 in June, indicating that orders are still declining sharply.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The CBI industrial trends survey for July disappointingly and worryingly showed a marked relapse in order books in July, thereby raising concerns about UK economic recovery prospects."

I missed this yesterday. I did think the inventory was cause of those green shoots about a month ago. Demand still seems very weak.

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Thanks to the OP for posting this. I was reading this on the train, but couldn't post a link. This article is basically saying we're heading for a double dip. I'd expect fast HPC so come back for a few months.

Companies that export are still seeing entirely dead order books. The government is keeping the economy going by issuing gilts, and QE. The real (non-government) sector seems to be in a very bad way indeed. Not sure whether the government expenditure can really make up for the drops in the real sector? Doesn't seem very likely, but they will try, and that will be more inflationary. That is perhaps why the stock market hasn't dipped again, investors expect poor company performance, but the pounds that the share prices are measured in are becoming less valuable. AS to house prices, well, they will continue to fall and fall, but can only fall at the rate that owners are prepared to accept reality.

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http://business.timesonline.co.uk/tol/busi...icle6722958.ece

I missed this yesterday. I did think the inventory was cause of those green shoots about a month ago. Demand still seems very weak.

I've mentioned this a couple of times, but Keynes explains the process of a bumpy road down from the peak rather that a straight line in terms of basic things like winding down inventories (prices and orders fall) and then building them up (creating a mini boom within a broader bust).

Harrison quotes Keynes in his Boom/Bust 2010 book, predicting exactly this dead cat bounce.

I find it exciting to be able to understand and predict these processes in such simple terms. It's why I sold my FTSE shares a few weeks ago, and still feel ok about doing so.

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Thanks to the OP for posting this. I was reading this on the train, but couldn't post a link. This article is basically saying we're heading for a double dip. I'd expect fast HPC so come back for a few months.

I agree...all these complete tosspots who have been ramping the economy and housing market are the same ones who were making the "modest growth" predictions in 2007. We are heading for a winter of despair for the UK economy and housing market with no real sign of levelling off until this time next year in GDP and this time in two or even three years time for the property market.

Their economic predictions will turn out to be as accurate as the forecasts we had for an amazing summer back in April (I was always suspicious that was a government order to make everyone feel good so they spend more moeny :ph34r: )

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Guest KingCharles1st

There is a major disconnect between real working people who need to make things in their sad little factories, and the rest of the neauvou populatzione that think getting a good final salary pension courtesy of Lab.kunt.uk is their birth right.

The biggest problem is that as a manufacturer, we are not on the ropes, we are on the canvas, and the ref is standing over us and has counted up to 9.... So that means we're almost out, and will be going home with NO PRIZE MONEY

But only the poor little grubby workers who value their wealth by the work they see going through the factory door actually understand this.

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It's why I sold my FTSE shares a few weeks ago, and still feel ok about doing so.

Bet you wish you'd sold them this week though ;) I've been sitting on a short position with a stop not far above 4500...It's not been the most comfortable time...I know I'm right long term, but as Keynes said, the markets can remain irrational for longer than you can remain solvent...I expect to see new lows by the late autumn, but will the FTSE breach its 4500 ceiling (it's tried three times now, a notorius triple top, so I'm keeping my finger crossed that tomorrows economic data will send it into a tailspin...that is if it hasn't been manipulated with a later downward adjustment)

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It is not wanted in this country. The manufacturing sector is finished with workers being crow-barred for housing costs that cannot be met by a globally competitive salary. Something has got to give, the govt and central bank want to keep costs high so there is only one solution.

Shift it abroad, or shut it down and get out of this rigged marketplace.

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Bet you wish you'd sold them this week though ;) I've been sitting on a short position with a stop not far above 4500...It's not been the most comfortable time...I know I'm right long term, but as Keynes said, the markets can remain irrational for longer than you can remain solvent...I expect to see new lows by the late autumn, but will the FTSE breach its 4500 ceiling (it's tried three times now, a notorius triple top, so I'm keeping my finger crossed that tomorrows economic data will send it into a tailspin...that is if it hasn't been manipulated with a later downward adjustment)

That'll make watching the FTSE more interesting for me ;-)

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Thanks to the OP for posting this. I was reading this on the train, but couldn't post a link. This article is basically saying we're heading for a double dip. I'd expect fast HPC so come back for a few months.

I don't really think it's a double dip, we haven't had any recovery to dip from.

More like despite the trillions spent flogging, governments have realised the horse is dead and not going to move another inch.

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So all this talk of green shoots is just nonsense then. The forecast was for -46 the actual was -59

With the global recession we will not be able to export more, once the global recession ends the weak pound

Should help exporters but this will not happen any time soon. We should be able to have an economy based

On exports and savings not consumption.

Business spending hiring and investment will be not getting any boost anytime soon either.

I think this country needs a stronger globally competitive manufacturing industry there is a place

For services as well but we need to compete with the likes of Germany and Japan when it comes

To manufacturing high quality products.

What does this mean for house prices: they are only going one way and that is DOWN

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I don't really think it's a double dip, we haven't had any recovery to dip from.

Agreed. The only slight recovery has been in asset prices, and is a direct reaction to QE IMO. It's not optimism, as it is being painted in the media. It's fear that you need to own something other than money. Once the suckers are taken out of the game, the asset prices will continue the spiral down.

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what factories are left?

Nothing to worry about... house prices are entering a mini-boom, and thats all that matters

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