Signs of recovery?

Quarterly Economic Survey: BCC

  • Most key balances strengthened in Q2 2013 compared with previous quarter but most balances remain below their pre-recession levels in 2007
  • Service export deliveries balance rose to +36%,  the highest level since the survey began in 1989
  • Employment balances rose in Q2, following their Q1 decline.
  • Business confidence has again increased
  • Manufacturing confidence that turnover will improve rose seven points
  • Profitability confidence rose

Business confidence index

Business confidence index / trade confidence index: BCC

Exports rise 1.4% in Q4 2012 – up 5.2% on Q4 2011

  • Nearly half of exporters (45%) said their export sales increased, compared to 13% of respondents, who said that they decreased;
  • In the service sector, export sales increased for 46% of firms, up from 42% in Q3; in manufacturing, export sales increased for 45% of businesses, up from 34% in Q3;
  • 59% of exporters feel that their turnover will increase in 2013. 50% believe that their profitability will improve in 2013;
  • More than a quarter of firms (27%) said they expected to increase staff this year, down from 31% in Q3

CBI SME Trends Survey

CBI’s latest quarterly SME Trends Survey

  • Both domestic and export orders among the UK’s small and medium-sized manufacturers fell in the three months to October.
  • Production levels continued to contract modestly, while business sentiment deteriorated for the second consecutive quarter.
  • Prospects for the coming quarter are somewhat better, with output expected to increase slightly and new orders expected to level off.

Economy remains stagnant

Economy remains stagnant: BCC Quarterly Economic Survey

  • Q3 results slightly worse than the previous quarter – UK economic performance remains weak and inadequate
  • Business confidence and investment falls
  • Recovery in exports has weakened
  • Domestic orders are weak and far below pre-recession levels
  • Firms less confident in taking on staff
  • Companies reported cashflow problems

UK Trade

UK Trade, July 2012: ONS

  • Seasonally adjusted, the UK’s deficit on trade in goods and services was £1.5 billion in July, compared with a deficit of £4.3 billion in June.
  • The UK’s deficit in Trade in Goods narrowed to £7.1 billion in July, down from £10.1 billion in June.
  • In the three months ending July 2012 trade in goods and services was estimated to have been in deficit by £8.0 billion, compared with a deficit of £10.5 billion in the preceding three months.

CBI cuts growth forecast

CBI cuts growth forecast to reflect weaker economic conditions

  • The CBI is forecasting GDP growth in 2012 to be -0.3%, below its previous forecast in May of +0.6%.
  • Growth should return to the UK economy towards the end of the year, and pick up a little pace during 2013
  • In the third quarter of 2012, quarter-on-quarter growth is expected to be +0.6%, followed by +0.2% in the final three months
  • In 2013, the CBI forecasts GDP growth of +1.2%, revised down from its previous forecast of +2%
  • Inflation is expected to fall back a little further by the end of the year, and should remain close to the Bank of England’s 2% target throughout 2013
  • The CBI does not expect unemployment to increase by as much as previously thought, peaking at 2.7m in mid-2013
  • Growth in business investment is expected to remain modest, at around 5% this year and 3.8% in 2013
  • Export growth is likely to be weaker than was forecast in May. The CBI expects a small contraction this year (-0.4%), followed by an increase next year (3.5%), with demand from faster-growing, emerging markets likely to provide some support

Weakening total and export orders

Manufacturers report weakening in total and export orders: CBI – Industrial Trends Survey

  • Of  456 manufacturers, 15% reported that order books were above normal, while 36% stated that order levels were below normal. The balance of -21% represents the lowest return since the end of last year (December -23%).
  • Export orders have weakened with manufacturers reporting a balance of  -17%. While still above the long-run average of -21%, this is the lowest figure reported since January 2012 (-26%).
  • Output is expected to be flat over the next three months, following two previous surveys in which manufacturers expected output to increase (June +7%, July +11%).
  • Output prices are also expected to be flat over the coming quarter for the third-consecutive month, with a balance of +1%.
  • Stock levels are below average, with a balance of +9% saying stocks are at least adequate to meet demand, the lowest figure since June 2011 (+3%).