MNI: UK Manufacturing Orders Ease Slightly in July: CBI

--July CBI Total Order Book Balance +11% Vs +13% Jun

By Jamie Satchi

     LONDON (MNI) - UK manufacturing order books and output volumes eased

slightly in the month on July but managed to hold on to the bulk of the 16-point

gain notched in June, a survey from the Confederation of British Industry showed

Tuesday. 

     --ORDERS REMAIN FIRM, EXPECTATONS MODERATE 

     The July total order book balance fell to 11% in July, down two points on

the June result -- which incidentally was the second best result of the year --

but well above the long-term average of -13. 

     Despite easing, the headline index kept hold of the majority of the

16-point gain notched in June, signalling steady, robust conditions among

manufacturers. A sub-component of the headline index, the export order balance

was unchanged on the month at 9%. 

     The volume of orders in the three months to July soared to 27%, up from 29%

in June, suggesting manufacturers closed out the second quarter in strong form.

Firms were slightly more conservative about their perceptions for the

forthcoming three months, however, with the expected volume of output measure

dropping four points to 14% -- but still above the long term average of 9%.

     --HEADWINDS PUTTING BRAKES ON INVESTMENT

     "The pick-up in output growth is good news and with new orders still

running at a healthy rate, the near-term outlook for manufacturers remains

reasonably bright," said Rain Newton-Smith, CBI Chief Economist.

     However, according to Smith, businesses were still in "wait-and-see mode"

when it came to key investment decisions, distorted by recruitment difficulties

and Brexit uncertainty.  

     "Skills shortages are increasing and making it hard for businesses to

invest in capital projects, particularly with on-going uncertainty around the

direction of Brexit talks," she said. 

     --QUAERTERLY OUTPUT EXPECTATIONS LOWEST SINCE JULY 2016

     Alongside the monthly figures, the survey included its latest set of

quarterly numbers. Total new orders were up one point 15% in the three months to

July, with an upward drive in domestic orders offsetting a decline in export

orders.

     In fact, looking at the forthcoming quarter, expectations for export orders

over the next three months also declined. The quarterly volume of export orders

balance, primed for the next three months, fell a point to 10% in the three

months to July, the lowest since July 2016.

     Expectations for overall quarterly demand over the forthcoming three months

also lost ground in July, slipping seven points to 14%, the lowest since October

2016.

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

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