Manufacturing orders plunged to a 30-month low in April but optimism about prospects ensured a mixed overall picture for Britain’s factories.
A steep slide in export orders pushed total order books to their lowest level since October 2010, according to the CBI’s Industrial Trends survey. A balance of minus 25% showed more firms’ order books weakened in April than grew.
That added to fears over the health of the manufacturing sector, which endured a tough 2012.
But optimism about orders and output was the highest for a year, with a balance of plus 23% expecting output to surge over the next three months, and plus 18% expecting orders to rise.
Factories also grew output over the three months to April and increased their stocks of work in progress.
CBI director of economics Stephen Gifford said it was a “mixed bag” for manufacturers, who are increasingly wary over the global outlook.
He said: “Although weaker sterling has eased concern about international competitiveness, manufacturers highlight the potentially chilling effect of political and economic instability abroad on export orders, such as the Cyprus crisis.”
IHS Global Insight economist Howard Archer said shrinking order books were “stand-out bad news” from the survey.
He said: “The concern is that most of the stronger elements of the April CBI survey relate to expectations for orders and output, and these could quickly relapse if there is not an actual near-term pick-up in demand.”
Manufacturing has weighed on output over the past year, helping drag GDP 0.3% lower in the fourth quarter of 2012. Hopes are pinned on the dominant services sector to drive first quarter growth, which would see the UK avoid a triple-dip recession.
Samuel Tombs at Capital Economics said: “We still see little reason to expect manufacturing output to recover much, if at all, this year.”
