The Q4 2011 results are once again disappointing and give cause for concern. For both manufacturing and services, most key balances have recorded declines and are weak by historical standards. While the balances are still stronger than at the worst phase of the recent recession, the improvement seen in recent years has mostly been wiped out. The Q4 domestic delivery balances point to stagnation in manufacturing and minimal growth in services.

The home orders balances moved deeper into negative territory, and highlight risks of declines early in 2012. The Q4 manufacturing export balances, though positive, fell for the fourth quarter in a row for both deliveries and orders. Although the service export balances improved in Q4 2011, they remain weak, and the service export orders balance is still negative. Weaker confidence balances in both manufacturing and services signal risks. In spite of weak growth overall, capacity utilisation figures are still relatively high in both manufacturing and services. Inflation remains the biggest area of concern for manufacturers and service firms, but the moderate price pressures experienced by firms should reassure the MPC.