Factory orders suffered their biggest drop in more than a year in December after a further weakening of export prospects due to the euro zone debt crisis, the CBI's industrial trends survey showed on Thursday.
The Confederation of British Industry survey's total order book balance fell this month to -23 from -19 in November, the lowest reading since October last year and below expectations for a balance of -21.
The export order book balance sank to -32 from -31, its lowest since January 2010.
Conditions in the UK manufacturing sector remain difficult, said CBI chief economic advisor Ian McCafferty. The weaker export performance no doubt reflects ongoing instability in the euro area, our biggest export market, and its knock-on impact on prospects for the real economy.
The expectations balance for manufacturers remained steady at a subdued -8, while the price expectations balance rose to +7 from +2, its highest since September, when consumer price inflation hit a three-year high.
A clear and orderly resolution to the (euro zone) crisis remains essential to prevent further adverse effects on both UK manufacturing and the wider economy, McCafferty said. (Reporting by Olesya Dmitracova, writing by David Milliken)