CBI industrial trends survey: UK manufacturers suffer biggest quarterly slump in three years

Jessica Morris
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Domestic demand saw its first quarterly fall since April 2013 (Source: Getty)

British factory orders suffered their biggest fall in three years in the three months to October, as a drop in domestic demand compounded problems selling goods abroad.

The CBI's quarterly industrial order book balance fell to -8, from +9 in July, its lowest level in three years.

The export orders balance during this period tumbled to -17, also its weakest performance since October 2012, while new domestic orders fell over the quarter for the first time since April 2013.

"​Manufacturers have been struggling with weak export demand for several months, because of the strength of the pound and subdued global growth. But now they’re also facing pressure back home as domestic demand is easing."

Manufacturers shrugged off the gloom, saying they expect overall manufacturing conditions to stabilise in the next three months, with a small rise in output, but new export orders are expected to edge down slightly further.

Read more: Official data to show UK economy slowed

"Conditions in the manufacturing sector probably have not deteriorated quite as rapidly as October’s CBI industrial trends survey suggests ... however, it is clear the manufacturing sector is struggling," Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said.

"The worst is not over for the manufacturing sector; sterling’s further appreciation over the last year will continue to depress export orders until mid-2016, at least," he added.

Howard Archer, chief economist at IHS, said: "This is a thoroughly disappointing survey through and through which indicates that manufacturers’ struggles are intensifying as a moderation in domestic demand adds to a still weakening export outlook."

Official data out tomorrow is expected to show that UK economic growth slowed quarterly to 0.6 per cent, down from 0.7 per cent between July and August. The gross domestic product data will be held back by construction and manufacturing output.

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