The CBI industrial trends survey for total orders has hit its highest level in seven months, up from -18 to -12, in-line with analyst forecasts. That's a seven month high. Business optimism came in at seven from five prior (eight expected).
32% of firms reported an increase in total new orders and 27% said they decreased, giving a balance of +5%, the highest since April 2012 (+8%)
The balance for domestic new orders (+6%) was the highest since July 2012 (+6%) and the balance for export new orders (+7%) was the highest since April 2011 (+24%)
Numbers employed in the manufacturing sector increased (+13%)
Howard Archer, chief UK & European economist, IHS Global Insight:
The CBI’s July survey is largely encouraging, indicating that the manufacturing sector has started off the third quarter pretty well. This lifts hopes that the UK economy can achieve further appreciable expansion in the third quarter after GDP growth likely at least doubled to 0.6% quarter-on-quarter in the second quarter from 0.3% in the first.
Samuel Tombs, UK economist, Capital Economics:
The UK CBI Industrial Trends Survey for July and Q3 joins the chorus of surveys indicating that the manufacturing sector’s recovery is gathering some pace, albeit less than in the rest of the economy.
At this level, the balance is consistent on the basis of past form with manufacturing output growing at an annual rate of about 1%. This improvement brings the CBI’s survey in line with the relatively upbeat tone of the other surveys.
For now, then, more good news. But with demand for exports weak in the UK’s largest market, the euro-zone, and domestic consumers’ real pay still being squeezed, it is hard to see how the manufacturing sector’s recovery can gather much more pace in the near term.
Stephen Gifford, CBI director of economics, said:
Manufacturers have seen a pick-up in activity across the board this quarter, with new orders and production continuing to rise.
Optimism in the sector has risen again, and demand conditions are expected to improve further in the coming three months.