GB: CBI Industrial Trends Survey

July 25, 2017 05:00 CDT

Consensus Actual Previous
Level 12 10 16

The Confederation of British Industry's Industrial Trends Survey shows a decline in its measure of United Kingdom factory orders from 16 percent in June to 10 percent in July, below the consensus forecast for a fall to 12 percent. Although this measure has now pulled back from the multi-decade high recorded in June, it remains above levels seen earlier this year, much stronger than in 2016, and well above the long-run average of minus 14. This indicates that conditions for UK manufacturers remain positive despite political uncertainty following recent national elections.

The pullback in the headline measure in July reflects a drop in the survey's measure of export orders, down from 13 percent in June to 2 percent. With 43 percent of respondents reporting that the volume of output has risen over the last three months and 12 percent reporting it has fallen, the balance of 31 percent is the highest since 1995.

Comparing the three months to July with the three months to April, survey respondents reported slightly weaker domestic and export orders but expect slightly stronger orders over the next three months. Expectations for domestic orders growth are the most positive since April 2015, while expectations for growth in export orders are at a four-decade high, reflecting the ongoing impact of domestic currency weakness. Expectations for output volumes are at their highest since 2014, while expectations for output prices have moderated.

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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