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Economy in Brief

UK CBI Survey Continue Backing Off
by Robert Brusca   September 16, 2010

The UK CBI survey showed backing off continues in the trend for new orders. Exports from EMU also have been weakening. Germany reported weaker IP and weaker new industrial orders. Germany’s Zew index has seen expectations back off sharply, but current conditions have continued to improve in Germany. This report from UK industry is just another sign of spreading weakness in growth.

The UK report shows the import survey off to a -17 net diffusion reading below August's -14 reading. This leaves the indicator in the 59th percentile of its range, a strongly negative reading that is still in the upper half of its range. Export orders also slipped and posted a -5 reading in September. They stand at a stronger position in the upper third of their range.

Optimism, however is still very solid in the UK, unlike in Germany. Output volume expected in the next 3-months rose to a net diffusion value of +12 up from +10. The average prices expected also rose to +11 from +5.

After a recession most economies have a growth spurt referred to as a recovery rate. The recovery rate is stronger than the average or sustainable growth rate for an economy. The growth spurt, usually lasts for a year or more in the recovery depending on a number of factors. So as we get one year into this recovery it is not surprising to see some topping off of growth rates. The continued optimism in the UK is the normal case. As growth is expected to slow but continue. The pessimism and holding back of consumer spending which is a rather widespread global phenomenon is not common and it is a reflection of the depth and nature of the recession and of the confidence economic agents have in policymaking authorities.

UK Industrial volume data CBI Survey
Reported: Sep
Pcntle Max Min Range
Total Orders -17 -14 -16 -23 -18 -36 59% 13 -61 74
Export Orders -5 -1 -12 -2 3 -25 67% 20 -55 75
Stocks:FinGds 4 1 3 11 10 11 18% 31 -2 33
Looking Ahead
Output Volume:Nxt 3M 12 10 6 15 17 6 71% 36 -48 84
Avg Prices 4Nxt 3m 11 5 9 14 16 5 61% 37 -30 67
From early 1989
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