The CBI's take on business activity this month was generally softer than expected although industry seems to remain confident about the outlook.
The total order book balance surprisingly fell a further 3 percentage points to minus 10 percent, its third consecutive decline and its lowest mark in two years. That said, the new reading was still 5 percentage points above its long-run average. Within this, exports held steady at minus 17 percent suggesting that the overall deterioration was attributable to the domestic market. However, the disappointment here was not reflected in output for which balances of 12 percent over the last three months and 15 percent for the next quarter both constituted just a 1 percentage point dip from last time.
Still, there was a rebound in prices which, following a 9 percentage point slump in June, jumped 8 percentage points to 1 percent to match their historic norm.
The July results suggest that UK manufacturing was performing moderately well at the start of the current quarter. Nonetheless, with an orders balance some 20 percentage points below its level as recently as February, the signs are that output growth may struggle over coming months. Businesses remain quite optimistic but their expectations have proved overly so throughout the year to date. Today's findings do not argue for any early hike in Bank Rate.
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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