UK manufacturers reported a further slight weakening in total order books in December 2011 while export orders remained well below their long-run average, the CBI says.

As a result, firms expect production to fall over the coming quarter, according to the CBI’s latest monthly Industrial Trends Survey. Of the 434 manufacturers responding, 18 per cent reported total order books to be above normal, while 41 per cent said that they were below. The resulting survey balance of -23 per cent is the lowest since October 2010 (-28 per cent).

Export demand also remained depressed. While 12 per cent reported export order books to be above normal, 44 per cent said that they were below. The resulting balance of -32 per cent is the lowest since January 2010 (-33 per cent) and still well below the long-run average (-21 per cent).

In line with weakened order books, manufacturers expect to reduce production over the next three months. While 24 per cent of firms believe output will rise in the next quarter, 32 per cent expect to cut back on production. The resulting rounded balance of -8 per cent is the third consecutive negative survey balance.

Richard Tunnicliffe, CBI East of England regional director, said: “Conditions in the UK manufacturing sector remain difficult, with demand both at home and abroad subdued. The weaker export performance no doubt reflects on-going instability in the Euro area, our biggest export market, and its knock-on impact on prospects for the real economy.

“A clear and orderly resolution to the crisis remains essential to prevent further adverse effects on both UK manufacturing and the wider economy, and to lift business confidence.”

Weak demand and output prospects have kept expectations for output price inflation muted. While 22 per cent of manufacturers predict that they will raise output prices over the coming quarter, 15 per cent expect to lower prices.

The resulting balance of +7 per cent is slightly higher than in recent months, but still significantly lower than stronger expectations seen in the first half of 2011.

Stock adequacy remained broadly in line with its long-run average (+14 per cent) in December. A balance of +16 per cent of firms reported stocks to be more than adequate for the second consecutive month.

• PHOTOGRAPH SHOWS: Richard Tunnicliffe, CBI East of England regional director