UK factory slowdown eases but companies remain wary, CBI survey shows

LONDON (Reuters) -Britain's manufacturing sector seems to have stabilised after a downturn but the outlook remains fragile with factories holding back on investment and cutting jobs again, according to a survey published by the Confederation of British Industry.

As well as weaker demand, manufacturers were facing tough price pressures, the survey published on Thursday showed.

"Conditions in UK manufacturing remain challenging, with many firms reporting subdued and unpredictable demand," Ben Jones, lead economist at the CBI, said.

"High input costs, labour shortages and global supply chain disruptions are continuing to put pressure on margins and capacity," Jones said.

The survey showed a drop in optimism among manufacturers with little sign of a recovery in investment plans. Companies were facing uncertainty about future demand, inadequate returns and persistent labour shortages, the CBI said.

A measure of employment in the next three months remained negative albeit less so than in April.

The monthly balance for manufacturing new orders improved to -30 in July from June's -33, taking them back to May's reading.

The monthly reading also showed a pick-up in average prices that manufacturers expect to charge over the next three months to +21 from +19 in June.

(Writing by William SchombergEditing by William James)