(Reuters) - A sharp downturn in British factories eased only slightly in January and optimism among manufacturers sagged to its lowest level in over two years, an industry survey showed on Thursday.
The Confederation of British Industry's monthly order book gauge improved in January to -34 from -40 in December, which had been a more than four-year low.
The CBI's quarterly gauge of business optimism fell in the first quarter of 2025 to its lowest level since late 2022.
"Manufacturers have entered the new year in a grim mood. Confidence has evaporated over the last three months as orders have dropped," said Ben Jones, lead economist at the CBI.
"A fall in domestic deliveries comes amid widespread concerns over the impact of the increase in National Insurance contributions, minimum wages and changes to employment law on firms’ operating costs," Jones said.
British finance minister Rachel Reeves increased social security contributions employers must pay in her first budget announcement in October. The CBI said price expectations from manufacturers also increased in January to their highest level since April 2024.
The survey was based on the responses of 343 manufacturers and was conducted between Dec. 19 and Jan. 13.