The CBI's latest Trends survey suggests that UK manufacturing had a poor September with stagnant output compounded by slowing orders and expectations for a further deceleration in production through year-end.
The headline overall orders index was a surprisingly soft minus 7 percent, still above its long-run average (minus 15 percent) but down 6 percentage points from August and wiping out much of that month's gain. New export demand was particularly weak, tumbling 16 percentage points to minus 24 percent and sliding below its historic norm (minus 20 percent). Past output (0 percent after 14 percent) was similarly sharply lower and to make matters still worse, expected production over the next three months dropped from 14 percent to 9 percent, just a couple of percentage points about its survey mean and equalling its lowest mark since February 2013. Rounding off a generally disappointing report, expected prices slipped from minus 6 percent to minus 8 percent.
Manufacturing has struggled since the first quarter output has fallen in three of the last four reported months and in July was 1.6 percent below its March peak. Today's survey points to a difficult fourth quarter and in itself, certainly does nothing to strengthen the case for a near-term hike in Bank Rate. It also makes for downside risk to next week's September manufacturing PMI.
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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