British factory orders dropped at the fastest pace in three years in the quarter to October as manufacturers remained worried about the possibility of a disorderly Brexit, a survey by the Confederation of British Industry showed on Tuesday.
The survey among 354 manufacturers showed that a net 6 percent reported a fall in new orders in the quarter to October, which was the weakest balance since October 2015. In July, the balance was +15.
Both domestic and exports orders decreased. The export order balance tumbled to -8 from +21 and the domestic order balance fell to -10 from +8.
Business optimism also eroded sharply with the corresponding balance falling to -16, the sharpest fall since July 2016.
Optimism regarding exports dropped at the fastest pace since 2012, down to -15 from -2 in July.
Manufacturers also scaled down their hiring and the balance fell to +7 from +17.
Looking ahead, a net 3 percent of factories expect output growth to stall in the coming three months, which was the weakest expectation since December 2015.
Domestic orders are expected to drop, while export orders are forecast to grow slightly.
Employment is expected to decline modestly in the coming quarter, with the balance at -6, the weakest expectation in two years.
"These figures are concerning and must not be taken lightly," CBI Manufacturing Council Chair Tom Crotty said.
"Ongoing uncertainty around Brexit has made for a particularly tough quarter for the UK's manufacturers...not surprising that many firms have recently moved publicly from contingency planning to action as the likelihood of a 'no deal' Brexit increases."
"This is a sobering set of figures demanding immediate action at home and abroad," CBI Chief Economist Rain Newton-Smith said.
"Planned investment is being scaled back in the face of deepening Brexit uncertainty, so it's vital that the Chancellor incentivises manufacturers to spend in areas that will help them become more productive."
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