Industrial orders are looking up, CBI finds

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14th September 2015 12:24 - Industrial

A recent survey by the Confederation of British Industry (CBI) has revealed that industrial orders in the UK notably improved during August, Industrial orders are looking up, CBI findswhich shocked economists, who initially predicted that that they would stay stagnant.

The survey showed the total orders index, which is a measure of the level of order books from UK manufacturers, had improved to -1 in August, up from -10 in July, the lowest reading in two years. The August figure exceeded the expectations of economists, who predicted a reading of -10.

According to the findings, output continued to increase at a steady pace in the three months leading up to August, which is expected to continue into the next quarter as well.

In August, total orders increased to well above average, whilst export orders also improved in more than 50 per cent of the sectors surveyed.

Despite the survey showing a notable improvement and figures which beat expectations, the orders index has been negative for four months, as growth in China comes to a standstill.

Of the companies in the survey, 20 per cent said that their order books were above average, however, 29 per cent said that they were below average, which results in a balance of -8 per cent, surpassing the long standing average of -20 per cent and suggested an improvement on a balance of -17 per cent in July.

The Confederation of British Industry’s Director of Economics, Rain Newton-Smith, said of the findings:

“While the rebound in manufacturers' total order books is encouraging, many firms are still struggling in overseas markets. On the one hand, the strength of Sterling and cheaper energy are reducing factory input costs, but the strong pound is also hitting export prices and margins hard.

With only 4% of the UK's exports going to China, the country's slowdown is not a direct cause of concern for our manufacturers, but it will make life harder for our firms in exposed sectors like metals and commodities.”

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