UK Industrial Orders Sink Surprisingly Fast

UK industrial orders fell off sharply in January and fell unexpectedly. The series have been expected to make a small improvement instead orders plummeted to a net reading of -16 from a net of -3 in December. Orders reside in the 61st percentile of their range and at the same position of their ordered queue of values as in their high-to-low range.

Export orders however remain high in their range at a net balance reading of 0 they stand in 57th percentile of their high-to-low range but much higher, in the 90th percentile of their ordered queue. This implies here may have been a few times when orders were much stronger than this but not many times when orders were stronger than this.

Despite the plunge in orders the outlook for output volume over the next three months is up and at a +17 standing in the 83rd percentile of its ordered queue of observations. Average prices at 16 stand in the 98th percentile of their ordered queue and that is not really good news.

On balance the UK data are unexpectedly weak. But they are not uniformly weak. The outlook is still solid and foreign orders are still at a high value but the domestic component for orders seems to be taking a hit. The reading on inflation expectations in the form of the view on prices over the next three months cannot be reassuring to the Bank of England.