The survey by
the Confederation of British Industry (CBI) revealed on Monday that the UK
manufacturers' order books improved sharply in June relative to May but were below
“normal” and slightly below the long-run average (-13).
According
to the report, the CBI's monthly factory order book balance increased to -18 in
June from -33 in the previous month. The June
figure was the highest in three months but was reported as below “normal” and
remained below its long-run average (-13). Economists had predicted the
reading to rise to -25.
The survey also
showed that the manufacturing output volumes were almost unchanged in the three
months to June after advancing in the three months to May (+3, compared to +14 in
the three months to May), and were forecast to gain modestly in the three
months to September (+13). In other survey results, expectations for average
selling price inflation heightened in June (+20, compared to +15 in May),
exceeding the long-run average (+7). Stocks of finished goods were considered
as “more than adequate” in June (+14, unchanged from the previous month), broadly
in line with the long-run average.
Commenting on
the results of the latest monthly CBI Industrial Trends, Ben Jones, CBI lead economist,
noted that it’s encouraging to see that manufacturers remain confident the economy
is heading in the right direction with the June survey suggesting that the
recovery should broaden out over the summer. However, he added that one note of
caution is that order books remain soft. “The sharp deterioration in export
order books is particularly striking and is something to keep an eye on in the
coming months,” Jones warned.