The CBI's October Trends survey was surprisingly weak. In addition to a contraction in recent output, expectations for new orders and future production slumped and the quarterly business optimism measure deteriorated sharply.
The headline orders index fell fully 11 percentage points to minus 18 percent, its lowest reading since the middle of last year. Output over the last three months (minus 4 percent after 0 percent) was the weakest since October 2009 and expected production through year-end (5 percent after 9 percent) was marked down significantly to a two and a half year low. Future prices (minus 7 percent after minus 8 percent) remained very soft.
Today's results reflect a combination of weakening overseas demand, still impacted by a strong pound, and a slowdown in spending at home. With manufacturers now starting to scale back earlier investment plans and employment growth well down from the start of the year, the last thing the sector needs now is a hike in Bank Rate. Today's report should help to underpin speculation that the first tightening will not be delivered until well into next year at the soonest.
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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