Total new orders fell at the fastest rate since July 2020, driven by declines in both domestic and export demand. The survey showed domestic orders down sharply, while export orders also weakened. Expectations for the next quarter point to an even faster contraction, close to pandemic-era lows, CBI said in an article on its website.
UK manufacturing sentiment has sharply deteriorated, with output and orders declining and competitiveness weakening, according to the CBI.
New orders fell at the fastest pace since 2020, while costs rose faster than selling prices, squeezing margins.
Investment and employment are set to decline further.
Rising energy costs and Middle East tensions are intensifying uncertainty.
Cost pressures intensified, with average costs rising at a faster pace than earlier in the year and expected to accelerate further. Although selling prices increased, they are projected to lag cost inflation, deepening pressure on margins and profitability.
Investment intentions remain subdued, with manufacturers planning to cut spending on buildings, plant and machinery, training and innovation. Employment also declined at the quickest pace since October 2020, with further job losses anticipated in the near term.
Competitiveness deteriorated across all major markets, with conditions in the UK worsening at a record pace. A growing share of firms reported operating below capacity, reflecting weak demand and rising spare capacity.
Ben Jones, senior lead economist, CBI, said: “Warning signs are flashing in this survey. Sentiment among UK manufacturers is deteriorating at a speed not seen since the pandemic. It’s clear that the war in the Middle East is contributing to rising uncertainty, with supply chains beginning to see some renewed strain and cost pressures intensifying.”
He further said that the UK’s high industrial energy costs had been a concern even before the conflict, leaving the manufacturing sector vulnerable to the crisis. Jones added that as the squeeze on competitiveness became more pronounced, output and orders were weakening, spare capacity was rising, and manufacturers were scaling back hiring and investment plans.
“The recent announcement to boost clean energy and decouple gas from electricity prices is a welcome step, highlighting the need for a consistent and coordinated approach to energy policy to strengthen industrial competitiveness. The government should now work with business to explore how to remove non-energy ‘policy’ costs from electricity bills, support industrial energy efficiency, and advance renewable infrastructure. Energy security is economic security; by securing the right foundations, we enable manufacturers to invest, compete and grow,” added Jones.
The survey, based on responses from 276 UK manufacturers, highlights a sector under sustained strain as demand softens, costs rise and confidence continues to erode.
Fibre2Fashion News Desk (SG)
