LONDON (Reuters) -Optimism among British manufacturers has fallen at its fastest pace since the start of the coronavirus crisis as orders slowed and prices leapt, a survey showed, adding to signs of a slowdown in the economy on the back of rising inflation.
The Confederation of British Industry said its quarterly measure of confidence among factory firms plunged to -34% from -9% in the three months to January, its lowest since April 2020.
Manufacturing orders and output continued to grow, albeit at slower rates and the war in Ukraine was exacerbating COVID-related supply problems, the CBI said.
That was pushing up costs and concerns over the availability of raw materials by the most since the mid-1970s.
The survey’s gauge domestic prices for the next three months rose to a 45-year high.
“April’s CBI survey adds to evidence that the manufacturing sector is slowing as customers temper their demand in the face of huge increases in prices,” said Samuel Tombs, an economist with consultancy Pantheon Macroeconomics.
“We think manufacturers are right to be relatively downbeat about the outlook and expect production to flat-line over the rest of this year.”
Monday’s survey echoed other measures of confidence which have fallen sharply among businesses and consumers as inflation accelerates.
Over the three months to April, the CBI’s gauge of output growth slowed to +19% from +27% – still above a long-run average of +4% – and new orders also rose more slowly +22% compared with +38% in the three months to January.
Firms expected growth to slow further over the next three months.
Average costs grew at the fastest rate since July 1975, with a net balance of 87% of firms reporting increases, up from +74% in January. Domestic prices grew at the fastest pace since October 1979, with a net balance of +60% compared with +40% in January.
However, a monthly version of the CBI survey showed price pressures were expected to ease in the three months ahead while total orders growth slowed to +14% in April from +26% in March.
(Reporting by William Schomberg and Andy Bruce)