WIREDGOV

The CBI’s November Industrial Trends Survey indicates that the recovery in UK manufacturing continues to have less momentum than earlier in the year. Expectations for future output growth weakened to the lowest rate in thirteen months, though they remained above average. Export orders were appreciably weaker than overall orders, but both have improved modestly since the October survey.

Some of these trends were echoed in the latest CBI’s latest SME Trends Survey. Small and medium-sized manufacturers’ output grew over the last three months, though less quickly than in the previous quarter, and with demand stronger at home than abroad. Domestic orders rose for the fifth quarter in a row in the three months to October, while export orders fell sharply, despite firms expecting a modest improvement. Prospects for the next three months are better: firms predict export orders will stabilise and domestic orders will continue to grow.

CPI inflation ticked up to 1.3% in October (from 1.2% in September), in line with the CBI’s forecast. Despite the slight rise last month, we forecast that CPI inflation will remain well below target out to the end of 2015, averaging 1.5% in both 2014 and 2015.

Meanwhile, construction output grew in September, increasing by 1.8% over the month, after falling in August (-3.0%). The increase was broad-based across both new work and repair & maintenance. In Q3 as a whole, output was up by 0.8% over the previous quarter, a broadly similar pace to that seen in Q2 (0.7%).

Data from the ONS showed that the labour market strengthened in the three months to September, and at a slightly faster pace than seen in the previous few months: the unemployment rate remained at 6.0%, with the level of unemployment standing at 1.96 million. Furthermore, there was a pick-up in pay growth with annual growth in regular pay (excluding bonuses) across the whole economy increasing from 0.9% in the three months to August to 1.3% in the three months to September, with private sector pay growth (1.6%) edging slightly ahead of inflation in the same period (1.5%).

For more information please contact mia.andersson@cbi.org.uk