The new CBI Trends survey suggests that the economy is slowing but only gradually. Business optimism has improved over the last three months but price expectations have been downgraded significantly.
The January survey returned a new orders balance of 4 percent, just 1 percentage point short of its December level and still well above its long-run average. That said, exports (minus 20 percent after minus 13 percent) were disappointing. Past output growth (10 percent after 13 percent) similarly eased slightly and the expected rise in production over the coming quarter (13 percent after 16 percent) was also trimmed. However, probably the most notable feature of the survey was a dramatic downward revision to factory prices (minus 6 percent from 7 percent) which posted their lowest reading since December 2009. At least in part this reflected the first quarterly drop in unit costs in some twelve years.
The broader quarterly survey was generally quite upbeat as summarised in the business optimism gauge which rose to 15 percent from 8 percent in October.
Taken at face value today's results should leave the BoE MPC happy enough and certainly they justify the decision of the Committee's two hawks to withdraw their call for an immediate hike in Bank Rate earlier this month.
CBI conducts a monthly survey of senior manufacturing executives on trends in output, prices, exports, and costs. The CBI's quarterly Industrial Trends Survey collects data on topics like current business confidence, capacity utilization and investment intentions.
Started in 1958, this is the UK's longest-running private sector qualitative business tendency survey. The survey is used by policy makers along with those in the business community, academics and top analysts in financial markets. One of its key strengths is that it is released within ten days and prior to official statistics and includes data not covered by official sources. It is never revised. The data are also used by the European Commission's harmonized business survey of EU countries.
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