GB: CBI Industrial Trends Survey

November 22, 2016 05:00 CST

Consensus Actual Previous
Level -8 -3 -17

The CBI's November Trends Survey was notably more upbeat than the October edition and comfortably stronger than market expectations.

The key orders book showed a 14 percentage point bounce to minus 3 percent, its best reading since June and well above its minus 15 percent long-run average. Moreover, the improvement here was wholly attributable to the domestic market as orders from overseas declined from minus 6 percent to minus 11 percent. Output over the last three months (4 percent after 9 percent) was somewhat less robust than in October but expectations for the next three months (24 percent after 13 percent) climbed sharply and to their highest level since February last year. Meantime, sterling's post-Brexit vote slide was again highlighted in the selling price gauge which rose from 8 percent to 19 percent, its strongest mark since January 2014.

Overall then the signs are that UK industry is still performing quite well and this should be reflected in another respectable manufacturing PMI. Businesses are clearly quite optimistic about the near-term outlook and with the effects of the pound's depreciation apparently yet to be felt, there should be another boost in the pipeline. Nonetheless, exchange rate generated inflationary pressures continue to build and CPI inflation looks more likely than ever to move, perhaps significantly, higher in 2017.

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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