British manufacturers reported a marked deterioration in confidence in April, recording their weakest sentiment since the start of the COVID-19 pandemic, according to a Confederation of British Industry survey published on Thursday. The decline was driven in part by uncertainty tied to the Iran war and a sharp rise in inflation expectations, the survey found.
The CBI said investment plans for buildings, plant and machinery and training fell to their lowest levels since April 2020. The group noted companies are pulling back on planned capital expenditure and workforce development at a time when other measures of activity have also softened.
Ben Jones, the CBI’s senior lead economist, said warning signs are flashing in the survey. He pointed to the conflict in the Middle East as a contributor to mounting uncertainty, and said supply chains are beginning to show renewed strain while cost pressures are intensifying.
The survey's quarterly optimism gauge for the business outlook plunged to -65 in April from -19 in January, a substantial decline in sentiment over a single quarter. The CBI's monthly order book balance also weakened, moving to -38 in April from -27 in March, and sits well below its long-run average of -14.
Notably, manufacturers' expectations for prices surged: the survey's expected prices measure rose to +32 in April from +12 in March. The CBI said this represents the largest month-to-month increase in that gauge since the series began in 1975, indicating a sharp uptick in firms' inflation expectations.
The findings are based on responses from 276 manufacturers collected between March 25 and April 13. The sample underpins the CBI's monthly and quarterly balances reported in the release.
Context and implications
The survey highlights simultaneous weaknesses across investment intentions, order books and forward-looking price expectations within the manufacturing sector. Those movements point to a combination of demand-side softness and rising input-cost pressure, as reported by respondents.
The CBI data provide a snapshot of sentiment over the survey window of March 25 to April 13 and reflect firms' assessments as global geopolitical tensions and inflationary signals intensified.