UK manufacturers’ order book balance plunges more than forecast in April

The latest survey by the Confederation of British Industry (CBI) revealed on Thursday the UK manufacturers' order books dropped sharply in April.

According to the report, the CBI's monthly factory order book balance fell to -56 in April from -29 in the previous month. Economists had forecast the reading to come in at -53. That was the lowest reading since July 2009.

The CBI reported that output in the quarter to April (-21 from -8 in March) fell at their fastest pace since August 2009 and is expected to fall at a considerably faster pace in the next quarter (-67), marking the weakest expectations for future output on record. Total new orders are anticipated to decrease at a noticeably quicker rate in the next quarter (-78, the weakest expectations on record). In addition, investment spending plans for the next year tumbled to a survey-record low for buildings (-65) and plant and machinery (-74). The share of firms citing uncertainty about demand (73), internal finance shortages (43), and an inability to raise external finance (20) as factors likely to limit capital expenditure in the next year climbed to their survey-record highs. Elsewhere, headcount in the three months to April (-14) dropped at a similar pace to January (-16), but manufacturers expect to reduce headcount (-61) at the fastest pace since October 1980 over the next quarter.

Rain Newton-Smith, CBI Chief Economist, noted: "Manufacturers have taken a sharp hit during the shutdown in response to COVID-19, with this survey revealing some record lows. Despite the already-quick fall in output and orders in the quarter to April, expectations point to a faster decline in the next three months. Given the uncertainty over how long the shutdown may have to last, it's little surprise to see businesses putting investment plans on ice as they work hard to get through this intact."