The CBI’s quarterly industrial trends survey has seen the fastest fall in headcount since April 2010, with firms anticipating an even sharper decline and expectations at their lowest since the financial crisis.
Driven mainly by a significant decline in the motor vehicles and transport equipment, the survey of 258 manufacturing firms also showed that firms expect output to deteriorate at a faster rate in the three months to January.
Manufacturers will be closely watching developments in Brussels and Westminster over the coming days and hoping that policy makers can avert a disastrous no-deal exit. If they fail, then we could be looking at a far gloomier outlook for our sector in the coming months” – Tony Crotty, CBI
Business optimism has taken a big hit, falling at the fastest pace since July 2016, and optimism about exports for the year ahead falling by the greatest degree in 18 years.
Investment intentions are also in decline according to the research, with plans to spend on buildings, machinery and training at their most negative since the financial crisis.
Rain Newton-Smith, CBI chief economist, said: “A combination of Brexit uncertainty and weaker global growth are clearly hitting sentiment and export prospects, with job prospects at their weakest since the global financial crisis.
“Finding a resolution that avoids a no-deal Brexit will give firms the confidence they need to step-up investment in people, growth and innovation. But for long-lasting prosperity we need an ambitious free-trade agreement which provides tariff-free access to our largest trading partner for our manufacturers right across the country.”
Group director of chemical producer Ineos, Tom Crotty, who chairs the CBI manufacturing council, said: “With Brexit reaching a critical crossroads, these gloomy results are unsurprising yet still very concerning. Most tellingly, manufacturers’ investment intentions across buildings, machinery, and skills are at their worst since the dark days of the financial crisis.
“Manufacturers will be closely watching developments in Brussels and Westminster over the coming days and hoping that policy makers can avert a disastrous no-deal exit. If they fail, then we could be looking at a far gloomier outlook for our sector in the coming months.”
Brexit uncertainty weighed heavily on export prospects, with the proportion of firms citing political or economic conditions abroad as a factor limiting exports over the next quarter hitting a survey record high. The share of firms citing quota and licence restrictions as a factor limiting exports was at its highest since 1983.
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Other key findings include:
- Numbers employed fell in the quarter to October (-9% from -8% in July) at their fastest rate since April 2010
- Firms expect employment to fall at an even faster pace next quarter (-22%), constituting the weakest expectations for headcounts since 2009
- Sentiment deteriorated in the three months to October by -44%, down from -32% in July
- Optimism about export prospects for the year ahead also worsened (-46% from -29% in July) to the greatest extent since October 2001.
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