July 2015 CBI Quarterly Industrial Trends Survey
The survey of 445 firms reported slower growth in total new orders in the quarter to July, though it remained above average. Growth in total new orders, output and numbers employed are projected to remain firm over the next quarter.
Manufacturing growth remains steady but exports pressured by stronger sterling. Greater buoyancy in exports remains a missing element from the UK’s recovery. Nevertheless we’re encouraged by the Government’s commitment to take steps to address this as part of its productivity plan.
The EU remains our largest trading partner, so while the UK economy’s direct exposure to Greece is minimal, UK leaders are all encouraged to act decisively to preserve growth and stability throughout the Eurozone.
The volume of new export orders rose slightly, but the outlook for the next quarter is gloomier. Survey respondents continue to report sharp falls in competitiveness in the EU, likely linked to Sterling rises earlier in the year. Political and economic conditions abroad were also seen as a constraint on orders by a significant number of firms.
Investment intentions remain broadly similar to the last quarter, staying above their long term averages, with plans for spending on building and plant and machinery improving slightly.
= 33% of businesses reported an increase in total new order books, and 24% a decrease, giving a balance of +9%. This remains above the long-run average (-1%).
= The balance for domestic orders (+12%) was also well above the long-run average (-5%) and the same as the previous quarter.
= The balance for export orders (+6%) was broadly unchanged from that in the previous two quarterly surveys (both +4%), but is above the historical average (-7%).
= 28% of firms reported a rise in output volumes, and 16% a decrease, giving a rounded balance of +12%, well above the average of +1%.
= Manufacturers’ investment intentions compared to the previous twelve months rose slightly for buildings (to -14%, from -19%) and plant and machinery (to -3%, from -6%), but dipped slightly for product and process innovation (to +17%, from +18%) and training and retraining (to +22%, from +25%).
= Manufacturers believe their competitiveness in the EU continues to fall sharply (-21%).
= Firms with present capacity at least adequate to meet expected demand fell (+85%) below the long-run average (+89%).
= Optimism about the business situation increased a little (+8%), whilst sentiment about export prospects for the year ahead fell slightly (-5%).
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