UK factory orders fall in July but prices soar

British manufacturers' orders fell in July and business confidence tumbled but price pressures rose at their sharpest rate in more than 18 years, a survey showed on Wednesday.
The Confederation of British Industry's industrial trends survey showed the total order books balance fell to -8 this month after +1 in June. Analysts had forecast a reading of -5.
Quarterly responses showed the business optimism balance fell to -40 in July, the weakest reading since October 2001.
Weaker demand did not prevent firms passing on the rising cost of raw materials and energy. The domestic price expectations balance jumped to +34 this month from +28 in June, the highest since January 1990.
"Cost pressures on manufacturers have been notable for over four years but in the last three months they have at been their most intense for nearly three decades so it comes as little surprise that manufacturers are passing some of these higher costs on to customers," said Ian McCafferty, CBI chief economic adviser.
Further signs of slowing demand and rising prices underline the dilemma facing the Bank of England as it aims to bring above-target inflation back under control without driving the economy into a recession.
The survey showed a surprise let-up in the pace of job shedding over the last three months, with the slowest pace of job losses since October 2004.
The outlook was bleak, however, with a positive balance of 27% of firms expecting to reduce headcount. Based on these results, the CBI estimated that 10,000 manufacturing jobs were lost in the second quarter and a further 26,000 would be lost between July and September.
Peter Newland at Lehman Brothers said the orders, output and optimism balances were consistent with levels reached just before the last recession in the early 1990s.
"The survey painted a very weak picture of manufacturing sentiment heading into the third quarter," he said.