The survey by
the Confederation of British Industry (CBI) showed on Wednesday that the UK
manufacturers' order books worsened sharply in December relative to November, hitting a 4-year low.
According to
the report, the CBI's monthly factory order book balance plunged to -40 this
month from -19 in the previous month. The December
figure was the lowest since November 2020 (-40) and below both “normal” and its long-run average (-13).
Economists had anticipated the
reading to decrease to -22.
The survey also
revealed that the manufacturing output volumes fell in the three months to December
at a steeper pace than in the quarter to November (-25, the lowest since August
2020, compared to -12 in the three months to November), and were expected to decline
again in the quarter to March 2025 (-31).
In other survey
results, expectations for average selling price inflation increased significantly
in December (+23, compared to +11 in November), strongly exceeding the long-run
average (+7). Stocks of finished goods were considered as more than “adequate”
in December and to a similar extent as in the previous month (+20, compared to +21
in November), with stock adequacy remaining well above the long-run average
(+12).
Commenting on the latest monthly CBI Industrial Trends, Ben Jones, CBI lead
economist, noted that manufacturing output appears to have contracted during
the fourth quarter, with conditions across the sector looking more challenging
than at any time since the COVID pandemic in 2020. “Manufacturers are facing a
perfect storm of weakening external demand on the one hand, amid political
instability in some key European markets and uncertainty over US trade policy,”
he added. “And on the other hand, domestic business confidence has collapsed in
the wake of the Budget, which has increased costs and led to widespread reports
of project cancellations and falling orders.”