UK factory orders drop amid virus second wave - CBI
By Sean Farrell
Date: Thursday 19 Nov 2020
(Sharecast News) - UK factory orders fell at a faster pace in November as the second wave of Covid-19 hit demand, a Confederation of British Industry survey showed.
The CBI's monthly manufacturing order book balance dropped to -40 from October's seven-month high of -34 though output volumes showed their strongest reading for more than a year.
The orders were slightly worse than a reading of -40 forecast in a Reuters poll of economists. Total and export order books both weakened and were well below their long-run averages.
The survey showed demand for manufactured goods falling as businesses responded to a new series of Covid-19 restrictions in the UK and other countries while factory activity continued to feel the benefit of orders placed since the first lockdowns ended.
The CBI's deputy chief economist Anna Leach said: "Output volumes have declined at their slowest pace in over a year in our November survey. But order books have softened again as global demand has been hit by intensified lockdowns, and manufacturers have trimmed their expectations."
The survey of 277 manufacturers found that output volumes declined in nine of 17 sub-sectors, with the headline drop driven by aerospace manufacturing. Manufacturers expect output to decline more quickly over the next three months and for output prices to fall.
Leach said: "The key to stabilising trading conditions for manufacturing firms will be getting the pandemic under control through further investment in mass testing, ensuring a seamless test and trace system, and an efficient vaccine rollout."
Pantheon Macroeconomics' Samuel Tombs said the survey appeared to show UK manufacturing flatlining at about 7 % below its pre-Covid-19 peak.
"It is encouraging that the second lockdown appears to have had a minimal impact on demand, production and supply chains," Tombs said. "But we had hoped that manufacturing output would pick-up in the final months of this year, amid stockpiling of goods by overseas customers in case of a no-deal Brexit in January."
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