Eurozone crisis pulls down export demand

Export demand has slumped to its lowest level for nearly two years amid fears the eurozone crisis is damaging manufacturing prospects, says the Confederation of British Industry.
By The Newsroom
Published 25th Nov 2011, 06:00 BST

A balance of 31 per cent of factory bosses reported export orders were below normal in November, a slide on the balance of minus 14 per cent seen the previous month and its lowest reading since January 2010.

Amid faltering UK demand and weakening export markets, manufacturers said for the second month in a row they expected output to fall over the next quarter, adding to fears of another recession.

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A balance of eight per cent expected a fall, little improved on the two year low of minus 11 per cent in the previous month.

CBI chief economic adviser Ian McCafferty said: “Developments in the eurozone, and their impact on prospects for our major trading partners, are clearly hitting the UK manufacturing sector, and we’ve seen a sharp decline in export order books this month. In response to weaker demand, firms still expect to cut back on production.

“With heightened uncertainty over global prospects and business confidence falling sharply, it is very possible that factories will see production slowing further in the near term.”

Overall, industrial order books, which include domestic demand, were slightly down on the previous month.

Howard Archer, chief economist at IHS Global Insight, said: “The manufacturing sector is now finding life very challenging.”