UK manufacturers slashed their expectations for output in a “massively disappointing” October, new data from the Confederation of British Industry shows.
Total factory order books fell at the fastest pace in a year, leaving a net 18 per cent of firms saying orders dropped, down from nine per cent in September.
Business confidence also crashed, as a net balance of 30 per cent of companies said they were less optimistic than three months ago and a net 24 per cent said they were less confident about export prospects.
The falls were the biggest since the depths of the last recession in mid-2009.
CBI chief economic adviser Ian McCafferty said the still-unresolved sovereign debt crisis in the Eurozone was a drag on manufacturers.
“Sentiment has deteriorated sharply, and firms expect sizeable falls in activity over the next three months,” he said.
"Confidence among manufacturers is no doubt also being sapped by uncertainty over developments in the Eurozone, leading to broader concerns over global growth."
Quarterly data showed domestic orders rose for a net five per cent of manufacturers in the three months to the end of October, but export orders also fell at a net balance of 14 per cent of firms.
Both domestic and export orders are expected to fall significantly in the next three months, the CBI said.
Howard Archer, chief European & UK economist
at IHS Global Insight, said the results were “massively disappointing showing substantial deterioration in total orders and production expectations.”
“The CBI survey fuels concern that the UK economy is in serious danger of contracting in the fourth quarter. It is blatantly evident that manufacturers are being hit hard by domestic and international headwinds,” he said.