The Q3 2011 results are disappointing and worrying. For both manufacturing and services, most balances have recorded declines and are weak by historical standards in all the key areas: home market, exports, confidence, cashflow, and investment in plant & machinery. The domestic balances signal minimal growth or stagnation; the forward-looking home order balances moved into negative territory for both manufacturing and services, signalling risks of recession.

The manufacturing export balances, though still firmly in positive territory, have shown a disturbing slowdown this year. The service sector exports balances indicate stagnation. The cashflow balances are in negative territory, for both manufacturing and services, indicating continued financial strains. Capacity utilisation fell for services, and is unchanged for manufacturing; but the capacity balances are still relatively high, given the subdued pace of growth. Price pressures, though still moderately high, have declined further in Q3. Inflation is still the biggest area of concern for both manufacturing and service firms, but the fall in price pressures should reassure the MPC