UK's CBI Orders Continue To Lag

The Confederation of British Industry continues to see very weak orders in both its domestic and export surveys. Both total and export orders are in the lower ten percentile of their historic range of values. Stocks of goods with a diffusion reading that fell to +13 from +20 are now near their range mid range (standing at their 45th percentile) and are well below their 12-monhth average, showing inventory progress has been made. In contrast orders are weaker than their 12-month averages. What ever is getting better it does not seem to be boosting orders despite the gain in August.

To compare with that finding we have the contrary result that although orders are very weak output volume over the next three months is expected to do much better. The survey measure rose to -5 in August from -14 in July, thrusting output volume expectations into the 57th percentile of their range, far better than the reading for orders. The average price expected has however slipped in August to -17 from -6 in June. That is on the lower 6 percentile of its range. These readings contrast with the UK MFG readings from NTC which at 50.84 is indicating expansion and stands in the 74th percentile of its range. (The NTC survey is also a diffusion survey but it presents its statistics as dose the US ISM rather than as an ‘up’ minus ‘down’ diffusion index as the one used by the CBI. For the CBI, zero is neutral; for the NTC index, 50 is the neutral mark. Also the NTC index is for manufacturing not all of industry, as is the CBI report.)

The outlook portion of the CBI index is relatively more positive, but still is not as upbeat as the Markit/NTC index. And the orders assessment from the CBI is downright depressing as its improvement in July still leaves the index lower over three months and longer. The picture of the UK MFG industry is curiously mixed. The differences are not simply those between different surveys but among somewhat related measures in the same survey.