THE EUROZONE crisis hit manufacturers in the final three months of 2011, according to the CBI’s industrial trends survey published yesterday.
Output stagnated, with a net balance of just two per cent of firms reporting an expansion, and 15 per cent reporting a fall in new orders – the first such drop in two years.
Sentiment fell in the quarter with a net balance of 25 per cent of firms feeling less optimistic about business conditions than they were three months ago – a steep drop, but slowing slightly on the 30 per cent tracked in the previous quarter.
A net balance of 20 per cent are also increasingly pessimistic about the year ahead.
“The Eurozone crisis is the single biggest factor dragging down manufacturing, which is a particularly export-oriented sector,” said CBI boss John Cridland.
“A resolution would help the economy. The biggest missing link is the stability fund, and the responsibility lies with politicians to boost that to over €1 trillion (£0.843 trillion) and ensure it can support Italy.”
The weak state of the manufacturing sector did not hit jobs, however, with a net balance of 11 per cent of firms increasing employment.
“This is in part due to employers’ concerns over retaining skilled staff,” said CBI economist Ian McCafferty.
“Also low wage settlements have helped firms keep on more staff.”