Orders for UK goods fall at fastest rate for a decade
Fall in demand for consumer goods deals major blow to manufacturing confidence
Orders for UK-made goods have fallen at their fastest rate since 1999, as both domestic and overseas orders are hit by the global economic slowdown, according to new data.
The latest quarterly CBI Industrial Trends survey shows that declining demand for manufactured goods, coupled with a sharp fall in output, has resulted in the sharpest single quarter fall in manufacturing confidence for 28 years.
The survey also reveals that more difficult lending conditions following the global credit squeeze are acting as a brake on manufacturers’ investment plans.
The balances of respondents planning to reduce capital spending on buildings and machinery over the next 12 months are the highest since the early 1980s.
Ian McCafferty, the CBI’s chief economic adviser, said: “It is also of serious concern that constraints on capital now appear to be affecting manufacturers, in a way that had not been the case earlier.
“We can but hope that the recapitalisation of banks and the cut in interest rates, which took place just as the survey closed, will prevent a further credit squeeze over the winter.”
In the last three months, 16 per cent of manufacturers reported a rise in new orders while 46 per cent said they had fallen. The resulting balance of minus 30 per cent signalled the fastest quarterly fall in total new orders since January 1999.
Much of this was driven by weak domestic demand. A balance of minus 38 per cent of firms reported falling domestic orders, the sharpest fall since January 1992.
But export orders, which in previous surveys had been supported by the depreciation of sterling, also fell as the global economic slowdown suppressed demand.
Firms’ perceptions of their total order book levels deteriorated over the quarter with a balance of -39% reporting levels below normal, the lowest since October 2003.