• CBI says factories forecast first drop in output since 2012
  • Exports remain weak link, overseas orders fall again

U.K. manufacturers are feeling grim about the outlook for their business.

For the first time in three years, factory executives expect output to drop over the coming three months, according to a monthly survey by the Confederation of British Industry published on Thursday. The report also showed continued weakness in foreign demand, with a gauge of export orders slipping to the lowest since early 2013.

Exports have been called the “weak link” in the economy by the London-based lobby group as softer global demand drags on U.K. output. Cooling factory activity and easing overseas sales may undermine hopes of Bank of England officials that growth can become more balanced and less dependent on domestic consumer spending.

“Poor export performance is weighing on the U.K. economy as manufacturers are held back by a strong pound and a weakening global growth outlook,” Rain Newton-Smith, CBI director for economics, said in an e-mailed statement.

The CBI said its outlook measure dropped to minus 6 this month, the first reading below zero since November 2012. The negative outlook was “reasonably broad-based,” with 11 of the 18 sub-sectors tracked predicting a decline, led by chemicals, mechanical engineering and metal manufacturing.

A measure of total factory orders rose to minus 11 from minus 18, the CBI said, while a gauge of overseas orders slipped 1 point to minus 29, its weakest reading since January 2013.

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