Manufacturers set for boost on positive data – London Report
MANUFACTURERS could be set to receive good news on activity during September, although this may be tempered by the fact that foreign orders are still limited, while the public sector’s finances also improved slightly over the summer.
Public finances data out tomorrow is expected to show ongoing year-on-year improvement in August.
Economists estimate that public sector net borrowing (PSNB) excluding banks will have narrowed to £9.2bn in the month, compared with £10.4bn in August 2014. It is also estimated that the total PSNB narrowed to £8.4bn from £9.6bn.
Tuesday will also see the publication of the Confederation of British Industry’s (CBI) industrial trends survey, which is expected to reveal that manufacturing activity showed slight improvement in September but was still being held back by limited foreign orders.
IHS Global Insights economists expect the CBI’s total orders balance to have edged up to zero per cent in September, from minus one per cent last month, and a two-year low of minus 10 per cent in July.
Howard Archer, IHS Global’s chief European and UK economist, said: “It is evident that manufacturers are currently being particularly constrained by weakened foreign orders, which is at least partly a consequence of sterling’s strength against the euro.”
He also warned that the export outlook “currently still looks problematical for manufacturers” given the ongoing strength of sterling and heightened concern that global growth could be held back by weaker activity in emerging markets focused on a marked slowdown in China.
However, Archer noted “some grounds for optimism” for manufacturers on the domestic demand front, particularly with regards to the consumer goods sector.
“Manufacturers should also be helped by current very low oil and commodity prices which increases their ability to price competitively,” he added.
On the corporate calendar this week, Finsbury Food Group reports today, while tomorrow Card Factory and Close Brothers will publish results.
On Wednesday, AA Group, Smith Group and United Utilities will update the market. Meanwhile, Thursday sees Euromoney Institutional Investor report.