UK manufacturers� expectations of output in the coming three months are at their lowest ebb for nearly seven years, a survey from the Confederation of British Industry shows.

Ian McConnell UK manufacturers' expectations of output in the coming three months are at their lowest ebb for nearly seven years, a survey from the Confederation of British Industry shows.

Yesterday's CBI survey is just the latest in a very long line of releases pointing to much tougher times ahead for the UK economy.

It shows price pressures easing from July's 18-year high, but remaining intense.

Thirty-three per cent of manufacturers surveyed by the CBI anticipate a fall in output in the next three months. Only 20% expect a rise, with the remainder forecasting a flat position. The net 13% predicting a fall in output is the bleakest balance since December 2001. The output balance had in July turned negative for the first time since December 2005.

The August output balance represents a further significant deterioration from the net 7% of manufacturers which predicted a fall in output in the coming three months in the CBI's industrial trends survey for July.

Thirty-nine per cent of manufacturers in the latest survey, undertaken between July 25 and August 13, anticipate raising the price at which domestic orders are booked in the coming three months. Only 8% expect to lower prices.

The net 31% expecting to achieve price rises is down marginally from the 34% balance recorded in last month's industrial trends survey, but the CBI noted it was "con- sistent with continued intense upward price pressures".

Thirty-six per cent of manufacturers considered their total order books below normal in August, excluding seasonal variations, and only 23% viewed them as better than usual. The CBI noted that the net 13% report- ing order books were worse than usual matched April's 18-month low.

Thirty-one per cent of manufacturers considered export order books worse than usual, and only 23% viewed them as better than normal. The rounded, net 9% considering them worse than normal was the weakest balance since May.

Paul Dales, UK economist at Capital Economics, said: "August's UK CBI monthly industrial trends survey suggests that the manufacturing sector is leading the rest of the economy into recession. The fall in the output expectations balance from -7 in July to -13 is consistent with the official measure of (manufacturing) output falling by around 3% (per annum) in the coming months.

"Both the total and export orders balances fell back to the lows seen back in April. And the recent weakening in activity in the eurozone - the UK's largest export market - suggests that further falls are likely. Overall, this survey suggests that it won't be long before the official data confirm that the manufacturing sector is in recession."

However, considering the slight easing of intentions regarding price rises to be good news on the inflationary front, Dales added: "Perhaps more significant was the fall in the prices expectations balance from +34 to +31. This was the first fall in seven months and could be the first sign that the sharp drop in the oil price is dampening the upward pressure on selling prices At least there are some signs that pipeline price pressures may have peaked."