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CBI survey: UK manufacturing output falls, export prospects hit 18-year low

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CBI survey: UK manufacturing output falls, export prospects hit 18-year low

Manufacturing output in the U.K. declined in the quarter to October as Brexit uncertainty took a toll on investment, export and employment prospects of businesses, according to the Confederation of British Industry's Industrial Trends Survey.

Of the 258 manufacturers surveyed, respondents reporting a fall in output outnumbered those reporting a rise, yielding a negative balance of 10% in the three months to October, down from a positive 1% balance in the same period through September.

Total new orders continued to decline, with a net 15% of respondents reporting a drop. A net 24% of businesses reported a fall in export orders.

Employment dipped at the fastest pace since April 2010, with a negative balance of 9% in the quarter to October.

Business sentiment dropped to the weakest level since July 2016, with manufacturers expecting output volumes and new orders to fall at a faster pace in the next three months.

Optimism about export prospects for the coming year deteriorated to the lowest level since October 2001, as the proportion of businesses citing political and economic conditions abroad as deterrents to export growth hit a survey record-high. Meanwhile, respondents citing license restrictions as limiting exports were the highest since July 1983.

In addition, manufacturers' investment plans and employment expectations worsened to the lowest levels since the financial crisis.

"A combination of Brexit uncertainty and weaker global growth are clearly hitting sentiment and export prospects, with job prospects at their weakest since the global financial crisis," said CBI Chief Economist Rain Newton-Smith.

The outlook for the U.K. manufacturing sector would be "far gloomier" if the U.K. and EU fail to avert a Brexit deal, CBI Manufacturing Council Chair Tom Crotty noted.