It could be a long time before we see a return to widespread job creation in UK manufacturing, even if the most optimistic hopes are realised

Doug Godden, CBI

The latest three-monthly survey from the Confederation of British Industry (CBI) showed confidence in the general business situation had dipped in 10 of the UK's 11 regions.

Only East Midlands manufacturers reported an upturn in optimism.

But looking forward, the CBI found that the majority of regions were more optimistic about prospects for orders and output.

"The worst of the downturn in manufacturing is probably over, but the global economy looks weak and recovery prospects remain fragile," said Peter Gutmann of Experian Business Strategies, which produced the report with the CBI.

Mixed picture

The CBI said the East Midland's confidence was probably due to the region's relatively large food-related sector, where output expectations remained strong.

The south west of England saw the steepest fall in confidence, with its mechanical engineering and transport sectors suffering particularly badly.

Looking ahead to the coming months, seven out of the 11 regions expected orders to rise, with the East Midlands and the North East the most optimistic.

Job gloom

Despite the relatively upbeat outlook for orders and output, the CBI warned that employment in most regions was likely to "contract sharply", especially in the South East, London and Wales.

The CBI predicted that 33,000 manufacturing jobs would go in the last three months of the year, bringing the total of jobs lost in the sector this year to 140,000.

It is a really difficult time for manufacturers and it has been for a while in the UK, Germany, Japan and the US

Alan Johnson, Industry Minister

"After four years of almost continuous decline at the national level, it's encouraging that manufacturers in several regions expect orders and output to pick up slightly in the months ahead," said Doug Godden, head of economic analysis at the CBI.

"But with profits under severe pressure, manufacturers will probably give priority to maximising productivity gains," he warned.

"It could be a long time before we see a return to widespread job creation in UK manufacturing, even if the most optimistic hopes are realised."

Global problem

Industry minister Alan Johnson told BBC Radio 4's Today programme he was not surprised by the CBI survey's findings, but said the UK was not alone in suffering.

"It is a really difficult time for manufacturers and it has been for a while in the UK, Germany, Japan and the US," he said.

"It's a tough time, but it's a tough time throughout the world."

He added that UK manufacturing still played an important role in the country's economy.

"It's still a fifth of our GDP and if you look at sectors like aerospace and the automotive industry, we have got some of the world's best manufacturers here, really high value-added manufacturers," he said.

"We'll never compete in low-wage, low-value, low-skills work - we don't want to compete on that basis."