British manufacturers reported a surge in orders this month after a largely sluggish start to 2018, and inflation pressures eased, industry data showed on Wednesday, potentially easing Bank of England concerns about an economic slowdown.
Factory output recorded its biggest monthly fall since 2012 in April, according to earlier official figures, raising the prospect that the economy’s near-stagnation in the first three months of 2018 reflected more than just unusually icy weather.
Since then, business surveys have pointed to an upturn among manufacturers, and this gathered strength in June’s industrial orders data from the Confederation of British Industry.
The CBI’s monthly orders balance jumped to +13 this month from -3 in May, its highest since January and well above all forecasts in a Reuters poll.
“The recovery in orders and a return to bumper growth in production suggests the lull in manufacturing activity may be over,” CBI economist Anna Leach said.
But she added that risks to growth from Brexit and escalating global trade tensions remained.
The survey’s price balance fell to +13 from +19, its lowest since July 2017, while the output expectations gauge softened slightly to a three-month low of +18.
“Producers appear to be taking a margin hit in order to protect demand,” Samuel Tombs of Pantheon Macroeconomics said.
The BoE shied away from raising rates in May because of the first-quarter slowdown, and said it wanted to wait for signs the economy was picking up before increasing the cost of borrowing for only the second time since the 2008 financial crisis.
No economists expect it to announce a rate rise on Thursday, but most expect a move in August, according to a Reuters poll. Financial market see a roughly 50 percent chance of a move then.
“A dire set of April manufacturing, construction and trade data looked to have raised the bar higher for an August hike, but this has been countered by evidence that the consumer has been much more active in the second quarter,” economist Howard Archer of consultancy EY Item Club said.
Source: UK Reuters