GB: CBI Industrial Trends Survey

Tue Aug 22 05:00:00 CDT 2017

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The Confederation of British Industry's (CBI's) latest take on the UK industry suggests that order books are filling up again, though not yet back to the levels seen at the start of summer. The survey shows a rise in factory orders to 13 from the 10 in July, beating the market consensus forecast calling for a one point decline. Indicating that UK manufacturing remains expansionary despite political uncertainty following the recent national elections, the August order book reading is just 3 points off June's level, a multi-decade high, and well above the long-run average of minus 14.

The increase in the headline August measure reflects a sharp 9 point rise in export orders to 11, with all the readings well above long run averages. Output volume balance was 30 in August, just below the July 31 reading, the highest since 1995.

Prices rose, with the average price balance increasing from July's 9 to 19, and though this is still well below the 23 reading seen in May and June, expectations for selling prices have rebounded, indicating that the squeeze on consumers is set to persist.

Solid output growth is expected to continue over the coming quarter, notably among exporters, who are evidently benefiting from the lower pound. Strong demand and sustained price pressures will no doubt be seen by at least some BoE MPC members, two of which already felt so inclined at the August meeting, as reason for a hike at the meeting in September.

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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