Manufacturers continued to record below-average order books in December, a survey showed today, although the figures improved for the third month in a row.
The CBI's final industrial trends survey of the year saw a balance of 12% report below-average levels of orders this month, compared to 21% in November and 23% in October.
Looking ahead, the majority of manufacturers expect output to be flat for the next three months while most expected a fall in November.
Investment goods sectors - especially mechanical engineering and aerospace - were the main drivers of growth, the CBI said, but half of the 12 main manufacturing sub-sectors expect output to fall, including chemicals and electrical engineering.
Howard Archer, chief UK and European economist, said: "A significantly improved December survey offers some grounds for optimism for manufacturers going into 2013 after they suffered a pretty torrid end to a largely difficult 2012."
The CBI, which represents some 240,000 businesses that together employ around a third of the private-sector workforce, said export orders held ground in December but there was no further improvement.
Meanwhile, expectations of output price inflation over the next three months picked by nine points to 17%, with all but two of the eleven manufacturing sectors reporting an increase in factory gate prices.
The food, drink & tobacco sector is the largest driver of the increased inflation expectations by some distance, the CBI said.
Anna Leach, the CBI's head of economic analysis, said: "December's survey reports a welcome improvement in manufacturers' order books and their expectations for output.
Read More
"Even so, they remain hesitant in predicting further output growth and are keeping stock levels low. Conditions in the sector and the wider economy are likely to remain fragile until global conditions improve over the course of 2013."
The survey will lift hopes for the wider economy amid fears it could shrink between October and December following a 1% rebound to growth in the third quarter.
