The UK's manufacturing output order book is in its best state since August 2011, according to new CBI figures. The order book balance indicator has improved from -12 to zero in July. Economists had predicted an improvement to just -8.
Other measures also improved, with the manufacturing output expectations balance at +25 from +12. The indicator for trends selling prices worsened slightly, falling from +2 to zero, despite analysts forecasts of a rise to +3.
Samuel Tombs, UK economist, Capital Economics:
The survey’s main total orders balance picked up from -12 in July to 0, its highest level since August 2011. At this level, the balance is consistent on the basis of past form with manufacturing output growing at an annual rate of about 4% - a slightly stronger rate than indicated by the other, less timely, surveys. We still worry that the manufacturing recovery will lose some pace later this year.
The recent upturn has been driven by stronger demand for consumer goods. But the pick-up in household spending has been based on shaky foundations insofar as it has reflected a sharp fall in saving, rather than a rise in real incomes. Nonetheless, with the CBI’s survey reporting a further decent improvement in export orders, the conditions for a sustained recovery in manufacturing seem to be falling into place.