UK manufacturing orders suffer worst monthly fall since January 2021

(Sharecast News) - UK manufacturers saw the worst monthly fall in orders in October since January 2021, according to a survey released earlier by the Confederation of British Industry. The CBI's monthly industrial orders balance declined to -26 from -18 in September, missing expectations for an improvement to -16.

The survey also showed that manufacturers cut employees "marginally" in the three months to October, and for the first time since January 2021.

CBI deputy chief economist Anna Leach said: "The warning lights are flashing red in our latest manufacturing survey, with business sentiment deteriorating, output volumes falling and manufacturers becoming more cautious over their employment and investment plans.

"Amidst a difficult environment for manufacturers, the Chancellor should use the Autumn Statement to build confidence and get the sector firing again, through a focus on skills development, encouraging business investment and grasping substantive net zero opportunities."

Gabriella Dickens, chief UK economist at Pantheon Macroeconomics, said: "The message from the CBI survey's total orders balance still is slightly more upbeat than that signalled by the S&P Global/CIPS manufacturing PMI survey, released earlier today.

"We are placing more weight on the latter; the CBI survey has a smaller sample size and asks respondents to compare orders to "normal" levels, rather than to the previous month, as the PMI does. Aa a result, we expect manufacturing output to tick down over the coming months, particularly given the fact that demand likely will remain weak, as firms continue to reduce their excess stock.

"The CBI survey, however, adds to our conviction that the rate of increase in the core goods CPI will slow over the remainder of the year. The net balance of manufacturers intending to increase selling prices over the next three months fell to a 32-month low of +7, from +14 in September, consistent with core producer output price inflation falling to around 0% over the next couple of months."