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Profits squeeze forces factory job cuts. By Dan Martin

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25th Apr 2006
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The UK's long-suffering manufacturers slashed 34,000 jobs during the last three months in an attempt to relieve the squeeze on profits.

Data for 2006's first quarter from the Confederation of British Industry found the number of workers shed was up 9,000 on the previous quarter bringing the total lost over the past 12 months to 122,000.

On the positive side, the report revealed factory demand and future orders expectations edged up after several months of decline but confirmed the spiralling rate of cost rises has continued.

Some 19% more firms said cost wents up between January and March this year, only marginally lower than the 23% peak recorded three months ago.

There is some hope on the horizon however with a balance of 4% of firms reporting an increase in total new orders. This contrasts with declines in the previous five quarters.

In addition, although total orders remained 'below normal', April's balance of minus 11% is the least nagative figure since February 2005.

Ian McCafferty, CBI chief economic adviser, said: "In recent weeks, the price of both oil and metals has hit record highs. In the face of these unprecedented costs, manufacturers have continued to make job cuts and focus any new investment on improving efficiency in a bid to rescue profit margins.

"But demand is rising slowly and manufacturers are raising their output in response, helped by more benign US currency conditions and better economic news from the Eurozone countries.

"Added to which, the first signs of an upturn in UK demand for investment goods, albeit from a low base. All eyes will now focus on domestic demand, which still has to show that it has turned the corner."

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