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Manufacturers have now been subject to serious price deflation for four years. Firms plan to cut investment in buildings, plant and machinery at a significant rate over the next 12 months. Projections for spending on innovation are flat, but encouragingly, plans for training expenditure are holding up surprisingly well.

The latest Quarterly Business Activity Survey conducted by EEF South, paints a picture of an industry which senses a 'bottoming out' of the current economic difficulties for manufacturers, with companies predicting a more stable trading environment going into 2003.

Manufacturers expect an improvement in new orders in the domestic market, although the EEF South survey underlines the current inability of firms to increase prices and margins. Concern also remains on the level of capital investment planned, although the picture has shown some small improvement over the last quarter. The numbers of companies reducing the size of their workforces also fell slightly.

www.cbi.org.uk, www.eef.org.uk