Fashion
UK manufacturers slam brakes on investment as demand weakens: Survey
The downturn in manufacturing output was broad-based across sub-sectors. Firms expect output to fall again over the quarter to January.
The UK manufacturing sector endured another challenging period in the quarter to October, with output and orders falling sharply, sentiment deteriorating and investment plans cut back sharply, a Confederation of British Industry survey revealed.
Demand conditions weakened notably, cost pressures remained elevated and and manufacturers’ investment appetite markedly deteriorated.
Demand conditions weakened notably. The volume of total new orders fell sharply across the quarter (minus 20 per cent, from minus 17 per cent in July). Both domestic and export orders fell at their fastest rates since the early stages of the COVID-19 pandemic (July 2020).
Levels of total and export order books remained well below their long-run averages, and manufacturers anticipate another drop in new orders over the next three months.
Cost pressures remained elevated, although growth in domestic selling prices has slowed and export prices have fallen, suggesting a squeeze on margins. Manufacturing competitiveness fell in all major markets, a CBI release said.
Manufacturers’ investment appetite has deteriorated markedly. Spending plans for the year ahead fell across every category, held back by weak demand, inadequate net returns and shortages of internal finance.
Investment in plant and machinery and buildings looks set to fall particularly sharply. The share of firms investing to expand capacity fell to a level last seen in the recessions of 2009 and the early 1980s. Meanwhile, employment fell at the fastest pace for five years.
The share of firms citing orders or sales as a factor likely to limit output in the next three months rose from July and stands above the long-run average (73 per cent, from 62 per cent in July).
Manufacturers expect stocks of finished goods, raw materials and work in progress to all fall in the three months to January.
Manufacturing competitiveness deteriorated across all major markets in the three months to October. Competitiveness is expected to decline again in the three months to January, particularly in UK markets, followed by European Union (EU) and non-EU markets.
The survey covered 218 manufacturing firms.
Fibre2Fashion News Desk (DS)