Optimism among British manufacturers has fallen at its fastest pace since the onset of the coronavirus crisis as orders slowed and prices leapt, a survey showed, adding to signs of a slowdown in the economy on the back of rising inflation.
The Confederation of British Industry said its quarterly measure of confidence among factory firms plunged to -34% from -9% in the three months to January, hitting the lowest since April 2020.
Anna Leach, deputy chief economist at the CBI, said manufacturing orders and output continued to grow, albeit at slower rates and the war in Ukraine was exacerbating COVID-related supply problems.
That was pushing up costs and concerns over the availability of raw materials by the most since the mid-1970s.
“It’s little wonder that sentiment has deteriorated sharply over the past three months and manufacturers are now scaling back their investment plans,” Leach said.
Over the three months to April, growth in output volumes slowed to +19% from +27% — still above a long-run average of +4% — and new orders also rose more slowly +22% compared with +38% in the three months to January.
Firms expected growth to slow further over the next three months.
Average costs grew at the fastest rate since July 1975, with a net balance of 87% of firms reporting increases, up from +74% in January. Domestic prices grew at the fastest pace since October 1979, with a net balance of +60% compared with +40% in January.
However, a monthly version of the CBI survey showed price pressures were expected to ease in the three months ahead while total orders growth slowed to +14% in April from +26% in March.
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