U.K. CBI Industrial Trends Survey orders fall in September

The U.K. CBI survey released today implies that conditions continued to be underwhelming in the third quarter. Indeed, the survey’s measure of industrial output volume dropped by 10 points in September to a net balance of 11, the second-lowest reading since 2016. Similarly, the index of order books dropped close to the bottom of the range of the past 20 months, with export orders the softest in over one year.

“The CBI took comfort from the fact that these survey balances for output, orders, expected output and prices remained above their respective long-run averages on the survey, which dates back more than four decades”, noted Daiwa Capital Market Research report.

However, since U.K. manufacturing production trended widely sideways for much of that period, that’s faint praise. Indeed, Brexit appears to have foiled what might otherwise have proved a welcome renaissance for U.K. manufacturing.

Surveys and anecdotal evidence implies that uncertainty regarding the U.K.’s future trading relationship with the EU is already being a drag on investment and new orders, and the CBI reported that “fears of a ‘no deal’ Brexit have prompted some companies to move publicly from contingency planning to action” – reason to believe that the government’s shambolic handling of the negotiations would have long-lasting negative impacts on manufacturing, whatever their eventual outcome, stated Daiwa Capital Market Research.

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