CBI: UK Manufacturing trends survey at lowest level since October 2009
We must be reading a different set of data than the mainstream media because according to them the UK economy is picking up, but from what we’ve been seeing there actually seems to be a noted slowdown of late:
- IMF revises UK GDP down (again) – is the Bank of England gearing up to print more money in response?
And today’s manufacturing orders report from the CBI seems to be supporting our view. From the report:
Manufacturing orders fell in the three months to October, while output was flat, the CBI said today.
However, expectations for both orders and output over the next three months are for moderate growth, while the employment and investment picture remains relatively positive.
Of the 395 manufacturers responding to the latest CBI quarterly Industrial Trends Survey, 25% said output rose, while 28% said it fell. The resulting balance of -3% is the lowest since October 2009 (-8%), and disappointed expectations of growth (+11%).
However, over the next three months, manufacturers do expect a moderate recovery in output, with a balance of +12%, which, if realised, would be the strongest growth since the three months to January 2011.
There’s that ‘hopium’ again.
The volume of total orders fell unexpectedly over the last three months, with both domestic orders (-10%) and export orders (-17%) dropping below their long-run averages (balances of -7% and -8% respectively). Nonetheless, expectations for the coming three months have not been dented by these results: expectations for domestic orders growth remain unchanged relative to the previous quarter (+4%), while export orders are once again expected to be broadly flat (+2%).
Why is it always ‘unexpected’?
However, the survey suggests that concerns about political and economic conditions abroad have risen. The proportion of firms citing this as the factor most likely to limit export orders increased from 25% in the three months to July to 34%, well-above the long-run average of 22%.
In line with somewhat softer activity, optimism regarding the business situation and export prospects for the year ahead both deteriorated (-12% and -19%). Furthermore, concern grew over orders and sales acting as a constraint on output in the coming three months (cited by 74% of firms, compared to 62% in the three months to July).
And here is what is happening to orders according to the CBI:
(click for sharper image)
All-in-all the report supports the view that the economy in the UK is still very much in the doldrums, not that you would know that from reading the BBC (it would seem their quality of financial reporting is just as much in question as their reporting of activities of certain children TV presenters).
Tomorrow we get the Q3 GDP figures for the UK – which is expected to show a positive print of 0.6%. It will no doubt be met with cheers of ‘the UK has turned a corner’ and ‘recession ends’. When the reality couldn’t be further from the truth.
The UK has been in one be long recession that started in 2008 from which it hasn’t pulled itself out of because the debt, which is the source of the malaise, has got bigger rather than being liquidated. In short the UK is actually in far worse shape than it was in 2008.
And here’s what we wrote at the start of October about what positive print in GDP tomorrow really means:
We agree that Q3 GDP might come in positive, but so what? Go look at what the UK’s GDP has been doing since 2008 – it’s still down some 4 years later and is clearly one big-long recession that the politicians and bureaucrats at the central bank are hell bent on turning into a depression (which is exactly what they did in the US in the 30s).
What matters is sustainable growth not just minor up-ticks in the GDP every-now-and-then. And the UK is never going to achieve that whilst all the debt is still in the system (and exponentially getting bigger each year).
The UK is just papering over deep rooted fundamental flaws in its economy and making that debt liquidation when it comes, which it always does, way more painful than it needed to be.
Related posts:
- UK PMI: Manufacturing falls to lowest level since Q2 2009 whilst prices surge
- As PMI falls to it’s lowest level this year ‘factory gate’ inflation hits a 7 month high
- CBI UK Manufacturing report makes grim reading – Bank of England money printing to come in October?
- Gold price holding around the $1655 level as GFMS gold survey eyes $2000
- Gold Bullion Trends
Link to this article: : http://www.goldmadesimplenews.com/analysis/cbi-uk-manufacturing-trends-survey-at-lowest-level-since-october-2009-8475/
Posted by Thomas Paterson on Oct 24 2012. Filed under Analysis.
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