GB: CBI Industrial Trends Survey

Tue Apr 24 05:00:00 CDT 2018

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The CBI's latest Trends Survey found little significant change in manufacturing conditions this month.

At 4 percent, the key orders balance was in line with both market expectations and the March outturn. However, this also meant that it equalled its lowest reading since last October. The export component (9 percent after 10 percent) was broadly stable.

Similarly, past output (13 percent after 16 percent) was only just short of its previous print but expectations for the coming three months (21 percent after 13 percent) were appreciably firmer and at a 3-month high. The outlook for prices (18 percent) was unchanged from last time.

Most worrying was a marked deterioration in general business optimism shown in the wider quarterly survey. At minus 4 percent, the sentiment gauge was fully 17 percentage points short of its first quarter outturn. With the export optimism index unchanged (15 percent) this implies companies have become notably more pessimistic about the state of domestic demand.

Today's results should provide some additional ammunition for the doves at the May BoE MPC meeting. The prospect of another hike in Bank Rate then hangs in the balance.

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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