British manufacturing output continued to fall in the quarter to October, a survey by the Confederation of British Industry (CBI) showed on Tuesday (Oct. 22).
The survey of 258 manufacturing firms also showed that prospects for the following quarter are downbeat, with firms anticipating output to deteriorate at a slightly faster rate in the three months to January.
Business optimism has taken a significant hit, falling at the fastest pace since July 2016, and optimism about exports for the year ahead deteriorated to the greatest degree in eighteen years. Investment intentions have also worsened, with plans to spend on buildings, plant & machinery and training & retraining at their most negative since the financial crisis.
Brexit uncertainty weighed heavily on export prospects, with the proportion of firms citing political/economic conditions abroad as a factor limiting exports over the next quarter hitting a survey record high. Additionally, the share of firms citing quota and license restrictions as a factor limiting exports was at its highest since July 1983.
While new orders fell at largely the same pace as the previous quarter, firms expect them to fall at a faster pace in the three months to January. Manufacturers did not report a sharp increase in stocks ahead of the October 31st Brexit deadline and don’t expect them to rise again in the three months to January.
Quarterly headcount was down, falling at its fastest since April 2010, with firms anticipating an even sharper decline the following quarter – with expectations at their lowest since the financial crisis.
“This quarter’s findings paint a worrying picture for the manufacturing industry. A combination of Brexit uncertainty and weaker global growth are clearly hitting sentiment and export prospects, with job prospects at their weakest since the global financial crisis.” Rain Newton-Smith, CBI Chief Economist, said.
“With Brexit reaching a critical crossroads, these gloomy results are unsurprising yet still very concerning. Most tellingly, manufacturers’ investment intentions across buildings, machinery, and skills are at their worst since the dark days of the financial crisis.” Tom Crotty, Group Director of INEOS and Chair of CBI Manufacturing Council added.