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British factory orders declined sharply in the three months to July as both domestic and export orders fell the most since the financial crisis and business optimism reached a 3-year low, hit by Brexit uncertainty and slow global growth, a closely-watched survey revealed Tuesday.
A balance of 15 percent of manufacturers surveyed reported a fall in new orders in the three months to July compared to +5 percent in the three months to April, according to the quarterly Industrial Trends survey from the Confederation of British Industry.
The domestic order balance declined to -19 percent and that of export orders to -28 percent. Both readings were at their respective quickest paces since the financial crisis, the lobby said.
Nonetheless, the new order balance for the next three months is forecast to pick up to +10 percent.
In July, the order book balance declined to -34 percent, while the score was forecast to remain unchanged at -15 percent.
Optimism among manufactures declined at the fastest pace since July 2016. The balance of optimism about the general business situation plunged to -32 percent in the three months to July.
After -11 percent of manufacturers reported a fall in volume of output in the three months to July, a balance of 6 percent expects volumes to recover in next three months.
The survey also showed further weakness in investment plans among manufacturers. Although employment declined in the three months to July, respondents forecast numbers to pick up again.
"As the tailwind from stockpiling weakens, clouds are gathering above the manufacturing sector," Rain Newton-Smith, CBI chief economist, said. "It's being hit by the double-blow of Brexit uncertainty and slower global growth."
With orders, employment, investment, output and business optimism all deteriorating among manufacturers, it's crucial for the new Prime Minister to secure a Brexit deal ahead of the October deadline, the economist added.
