GB: CBI Industrial Trends Survey

September 22, 2016 05:00 CDT

Consensus Actual Previous
Level -5 -5 -5.0

The CBI's September Trends Survey provides further evidence that the Brexit vote has, at least so far, had only a limited impact on UK business activity.

The key orders index was unchanged from its August reading at minus 5 percent and so in line with expectations. Within this, the export component declined 4 percentage points to minus 10 percent implying that the domestic market was actually slightly firmer and both indices were well above their respective long-term averages. Output over the last quarter (11 percent) was similarly steady at August's mark but is expected to climb sharply (22 percent) and at its fastest rate since March over the coming three months. Promisingly, some eleven of the eighteen reporting categories anticipate an acceleration in production growth. Meantime price rises were again restrained with a balance of only 8 percent seeing higher charges through year-end.

In general today's results are surprisingly good. The dip in the export orders index may be a little disappointing in the wake of sterling's depreciation but historically it is still firm and companies indicated that they were benefitting from improved competitiveness. The overall tone of the survey suggests that the September manufacturing PMI should remain comfortably in positive growth territory.

The Confederation of British Industry (CBI) produces a monthly survey (and a more detailed quarterly report) analysing the performance of UK manufacturing industry. This is the UK's longest running qualitative business tendency survey. Questions relate to domestic and export orders, stocks, price and output expectations with the main market focus being the domestic orders balance. The survey is seen as a loose leading indicator of the official industrial production data.

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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