The CBI's monthly industrial orders index sank
to -15 this month from -10 in May, its weakest since October
2016 and a steeper fall than a forecast of -12 in a Reuters
poll.
The production index for the three months to June dropped to its
lowest since the three months to April 2016, hit by sharp falls
in car production this April.
Many carmakers suspended production that month, expecting
disruption around the March 29 date on which Britain had been
due to leave the European Union.
"Brexit uncertainty is holding back growth in key industries,"
said Tom Crotty, group director of energy and chemicals group
INEOS, who chairs a CBI manufacturers' panel. "The first item in
the new prime minister's in-tray must be to quickly resolve the
Brexit deadlock."
Britain is now due to leave the EU on Oct. 31, and former
foreign secretary Boris Johnson -- the leading contender to
succeed Prime Minister Theresa May -- says he is open to leaving
without a deal if the EU will not renegotiate.
The CBI, which wanted Britain to remain in the EU, has
repeatedly said a no-deal Brexit would cause major disruption to
trade and supply chains.
Britain's economy performed better than expected in the first
quarter of 2019, growing a robust 0.5% due to a bigger than
expected boost from businesses stocking up ahead of the
long-anticipated March Brexit date.
But this boost is expected to go into reverse during the current
quarter, with the Bank of England estimating growth of just 0.2%
and some forecasters predicting a contraction.
Pantheon Macroeconomics's Samuel Tombs said he expected
industrial production would pick up in the third quarter as car
plants operated through the summer holiday period -- and that
even if factory output remained weak, the sector was too small
to push Britain's economy as a whole into recession.
"The much larger services sector stands to benefit from robust
growth in households' disposable incomes," Tombs said.
(Reporting by David Milliken; Editing by Catherine Evans)
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