UK manufacturers suffered weakening order books in November, with export orders deteriorating particularly significantly according to latest CBI data.
The CBI's Industrial Trends survey painted a gloomy picture of the sector with firms predicting a fall in production over the next quarter.
CBI Chief Economic Adviser Ian McCafferty said that developments in the Eurozone, and their impact on prospects for the UK's trading partners were clearly hitting the manufacturing sector. He went on: "In response to weaker demand, firms still expect to cut back on production. With heightened uncertainty over global prospects and business confidence falling sharply, it is very possible that factories will see production slowing further in the near term."
Chris Williamson, chief economist at Markit, said the CBI survey, which looks at companies' expectations of production levels over the next three months, suggested that increasing numbers of producers will be looking to reduce capacity and cut costs, which will invariably mean job losses.
He added: "The downbeat picture of a sector that is clearly struggling in the face of rapidly deteriorating export markets and lacklustre demand at home".