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UK manufacturers cautiously optimistic

Orders and confidence in the UK’s manufacturing sector have improved slightly in June, the CBI reported today.

The business organisation said that 27% of manufacturers expect to increase their volume of output over the next three months while 19% expect output to fall.

This results in a balance of +7% of UK manufacturers who expect to increase their volume of output in the next three months, contrasting with the negative balance of -3% in the previous month, when a majority expected business to decline.

Despite the improved sentiment, expectations are still well below the balance of +24% seen in the March and April surveys.

Samuel Tombs, an economist at Capital Economics, told the Guardian that the CBI’s survey could often be volatile and too upbeat compared with official figures and other surveys.

In terms of the flow of orders, 17% of manufacturing firms reported that their order books were above normal and 28% said that order levels were below normal. The balance of -11% represents an improvement from last month’s -17% and is above the long-run average, which is also -17%.

Despite continued instability within the eurozone, export orders also strengthened with a balance of -4%, clearly above the long-run average of -21%.

Meanwhile, expectations for output price inflation have weakened as in the latest survey a balance of only +2% of firms expect to increase output prices over the next quarter, the lowest since November 2011.

The CBI compiled its latest Industrial Trends Survey from the responses of 459 UK manufacturers between 23 May and 13 June.


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