Omicron uncertainty weighs on UK factories

British factories are being hit by uncertainty over the potential negative impact the Omicron variant of coronavirus will have on the UK economy, reveals a new survey published today.

Orders for manufacturers’ products jumped 24 per cent over the last month, but edged back from 26 per cent growth in November, according to the Confederation of British Industry (CBI).

Firms are seemingly holding off from committing to big ticket purchases produced by UK factories until greater clarity on Omicron emerges.

Persistent worker shortages are also weighing on UK manufacturers’ capacity to fulfil orders, according to Gabriella Dickens, senior UK economist at Pantheon Macroeconomics.

“The recovery in the manufacturing sector is coming under some pressure from the emergence of the new Omicron variant and ongoing supply and labour shortages,” she said.

“The total orders balance merely edged down, but it probably is underestimating the drop in demand, as it is not seasonally adjusted and nearly always rises in December,” she added.

Swelling cost pressures generated by the persistent supply crisis engineering a shortage of crucial components, driving up prices in the process, continue to plague British factories.

Anna Leach, deputy chief economist at the CBI, said: “UK manufacturing demand remains strong, and output accelerated to meet this demand in December. However, behind the scenes, firms are battling pressures on a number of fronts.”

“Stock adequacy of finished goods worsened to an all-time low for the second month in a row, and continued expectations for sharp price growth are a further challenge for the sector.”