The CBI's latest take on industrial trends suggests that producers had a very decent May. Faster growth of new business complemented an apparently solid increase in output and would seem to lay the platform for a robust second quarter.
The headline new orders index weighed in at 9 percent, a 5 percentage point improvement versus both its April reading and market expectations. It was also fully 24 percentage points above its long-run average and the strongest outturn since February 2015. The increase here was in part due to a better performance by exports where the sub-index climbed 7 percentage points to 10 percent, similarly comfortably higher than its historic norm (minus 19 percent).
Past and expected output (both 28 percent) recorded very healthy readings and both signalled an acceleration in growth versus the start of the quarter. The expected prices balance (23 percent) slipped from April but remained high enough to suggest that factory gate inflation will remain under upside pressure for some time yet.
Today's report paints a surprisingly bullish picture of UK manufacturing. The second quarter would seem to be shaping up well and the sector should make a more than useful contribution to the period's overall economic growth.
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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