According to the new CBI Trends survey UK manufacturing had a decent June but prospects for the third quarter appear to have deteriorated surprisingly sharply.
Hence, while past output (13 percent after 9 percent) saw its highest mark since February, the total orders book dropped 2 percentage points to minus 7 percent, still above its long-run average (minus 15 percent) but its lowest reading since July 2013. A 10 percentage point slump in exports to minus 17 percent, a 4-month trough, was the main factor and will fuel concerns about the strength of the pound within Europe. However, despite this, output expectations for the coming three months were essentially flat (16 percent after 15 percent) albeit well short of the 25 percent and 22 percent postings seen in February and March respectively.
The other main point concerns expected prices which, at minus 7 percent after 2 percent, dropped to their weakest level since 2009.
Overall today's results constitute a very mixed bag. The bottom line is that the goods producing sector is doing alright, but with factory gate prices clearly still under significant downward pressure, there is little here to make the BoE's MPC contemplate pulling forward the first Bank Rate hike of the new cycle.
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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