GB: CBI Industrial Trends Survey

Thu Jun 22 06:00:00 CDT 2017

Consensus Actual Previous
Level 7 16 9

The CBI's latest take on UK industry suggests that an apparent slowdown in recent output growth will be only temporary as orders books expanded at historically rapid rates.

Hence, the headline orders index unexpectedly surged 7 percentage points to 16 percent, a multi-decade high and far above its long-run average (minus 14 percent). Within this, exports (13 percent after 10 percent) also enjoyed a very robust period. The buoyancy here took the edge off a 13 percentage point decline in past output to 15 percent. Expected production over the coming quarter was essentially flat at a solid 27 percent, much in line with the levels seen around the turn of the year.

Meantime, inflationary pressures remained elevated with the expected prices measure steady at 23 percent, some 21 percentage points above its historical norm.

Today's results are surprisingly upbeat and suggest little, if any, impact from the surprise general election result. Strong demand and sustained price pressures will no doubt be seen by at least some BoE MPC members as reason for hiking Bank Rate at what could well be a very interesting meeting in August.

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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