September 24, 2019 / 10:07 AM / 2 months ago

UK factory output expectations plunge to 10-year low - CBI

LONDON (Reuters) - British factories’ expectations for output fell in September to their lowest in more than 10 years, according to a survey that showed Brexit and a global slowdown weighing on manufacturing.

FILE PHOTO: A worker holds a component for a Volvo truck at the Muller manufacturing facility in Redditch, Britain August 28, 2018. REUTERS/Darren Staples

The Confederation of British Industry’s (CBI) monthly manufacturing order book balance fell to -28 in September from -13 in August, below expectations in a Reuters poll for a reading of -18.

The survey’s gauge of output expectations for the next three months dropped to -19 from -1, its lowest since April 2009, as stocks of finished goods piled up at the fastest rate since the 2008-09 financial crisis.

The figures chimed with a slew of dismal manufacturing data across Europe, after a survey on Monday showed German factories were at their lowest ebb last month in more than 10 years.

Trade conflict between the United States and China and a global downturn in the automotive sector have hammered manufacturers all over the world. The escalating Brexit crisis has additionally dampened investment in British manufacturing, which accounts for 10% of economic output.

“The survey does little to suggest that the manufacturing sector have been of much help to UK growth in the third quarter,” economist Howard Archer from the EY ITEM Club consultancy said.

“The very real risk that a no-deal Brexit could yet occur on Oct. 31 could well fuel near-term concerns over manufacturers’ supply chains and ability to meet future demand.”

Earlier on Tuesday, the Supreme Court ruled that Prime Minister Boris Johnson’s decision to shut down the British parliament for five weeks in the run-up to Brexit was unlawful, a humiliating rebuke to him.

Capital Economics, a consultancy, put the odds of a no-deal Brexit at 40% on Tuesday.

“Each day of Brexit uncertainty sees firms forced to withhold key investment and recruitment decisions that make a huge difference to communities across the country,” said Tom Crotty, group director of energy and chemicals company Ineos and chair of the CBI manufacturing council.

“It is therefore crucial that no more time is wasted in ending the Brexit deadlock, and that a damaging no-deal cliff-edge is avoided at all costs.”

Reporting and graphic by Andy Bruce; Editing by Steve Orlofsky

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