By Peter Griffiths and Sven Egenter
LONDON Oct 24 British factory orders posted a
surprise fall in October, the CBI's industrial trends survey
showed on Wednesday, fuelling fears that a recent timid economic
recovery may not last.
Britain probably came out of recession between July and
September. Third-quarter gross domestic product figures due on
Thursday are expected to show solid growth, boosted by a one-off
rebound after an extra public holiday hit output in June.
But Bank of England Governor Mervyn King warned on Tuesday
that a slowdown in emerging markets posed a new threat to the
British economy, adding that the central bank was ready for more
stimulus should positive signs of recovery fade.
The Confederation of British Industry survey's total order
book balance dropped to -23 this month from -8 in September,
well below even the most pessimistic economist's forecast and
the lowest level since December 2011.
"Any hope that the UK manufacturing sector would dodge the
bullet from the weakness in the euro zone manufacturing sector
looks forlorn today," said BNP Paribas economist David Tinsley.
"We said in response to Governor King's speech last night
that he was seeing things in a glass-half-full perspective at
the moment," he added.
"If the data flow over the next few weeks continues in the
vein we have seen today, then that glass is going start looking
pretty empty quickly," he said.
Most economists had expected another dose of BoE
quantitative easing via government bond purchases once the
current 50 billion pound round is completed in November.
However, King's comments fuelled doubts about the timing since
he also said the BoE would have to think long and hard before
deciding whether to make further asset purchases.
The CBI's quarterly survey showed that manufacturers'
sentiment took a hit in the three months to October as companies
reported the worst output performance in three years.
"Domestic and overseas demand have both slipped unexpectedly
this quarter, while output growth tailed off," said CBI head of
economic analysis Anna Leach.
"Sentiment regarding business conditions has also fallen
back, particularly for exports," she said.
"UK companies are increasingly concerned by political and
economic conditions abroad," she added.
However, companies still expect modest orders and production
growth in the coming three months, the CBI said.