U.K. January CBI Factory Index Falls as Export Demand Weakens

A U.K. factory index unexpectedly fell this month as export demand weakened, indicating continued weakness in manufacturing at the start of 2013, according to the Confederation of British Industry.

A gauge of orders fell to minus 20 from minus 12 in December, the London-based business lobby said in a report published today. The median of 14 forecasts in a Bloomberg News survey was for a reading of minus 11. Still, the report also showed that manufacturers have become more confident, with a quarterly optimism index rising to zero from minus 12 in October.

Britain’s economy may grow 1.1 percent this year after shrinking an estimated 0.1 percent in 2013, according to a survey of economists published on Jan. 17. Confidence has been partly boosted by an easing of tensions in the euro area, Britain’s biggest export market, after a European Central Bank bond-buying pledge.

“While domestic demand and business optimism have steadied, export demand remains a concern for manufacturers with orders continuing to fall, albeit at a slower rate,” Anna Leach, head of economic analysis at the CBI, said in a statement. “There are encouraging signs of stability in overall demand, however, with domestic orders, export orders and production expected to rise in the quarter ahead.”

An index of export orders fell to minus 29 in January from minus 11 in December, according to the monthly CBI data. Expectations for output over the next three months rose to 8 from zero, while expectations for selling prices increased to 21 from 17.

Within the quarterly survey, a measure of factory output rose to minus 2 in January from minus 3 in October. A new-orders gauge advanced to minus 4 from minus 13. An index of output expectations for the next three months was at 8.

The CBI conducted the survey of 389 manufacturers between Dec. 15 and Jan. 11.

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