Oh deary, deary.Â Whichever way you look at it, the latest Industrial Trends survey from the CBI is not good.The May headline index is in negative territory -10.Â In fact, 21 per cent of firms rated their total order book as above normal and 31 per centÂ said it was below, giving a balance of -10.Â It has been worse, in fact last month it was a little worse, but even so, at a time when consumers are suffering, what we need is for manufacturers to take up the baton, so it is especially worrying they appear to be under the cosh.But, alas, thatâ€™s the best bit.The highest balance of manufacturing firms since 1995 have told the CBI their products will get more expensive over the coming three months, as rising oil prices drive up costs.Â Â Â Â Â Â More to the point, manufacturers are planning to pass on these extra costs.The CBI says that despite shrinking demand, 36 per centÂ of manufacturers expect they will put their prices up over the next quarter, compared to just 6 per centÂ who say they will fall.Â The balance of +30 is the strongest since February 1995 (+31).
Now, in the past,Â these CBI surveysÂ do seemÂ to pre-date official data by several months.Â Â Â For example, a year ago, the CBI made headlines when its index for measuring output prices hit 25, yet it wasnâ€™t for anotherÂ 4 months that the official data started to reflect this.Â Â So the omens for later this year are not good.
But to cap it all, the CBI export index is down too, hitting -12 in May, the lowest level for some time.
Ian McCafferty, chief economic adviser at the CBI, said:
“It is clear from the pricing data in the survey that manufacturers are really feeling the impact and having to pass their increasing costs on. Oil prices rose more than 75% over the last year, and 14% in the past month alone.
“These rising inflationary pressures make it ever more unlikely that we will see the cuts in interest rates expected by the markets only a few weeks ago.
“The survey also shows that the sector is now being affected by the slowdown seen in other areas of the economy. For the second month in a row firms are saying orders are below normal and that output levels will be flat.”
© Investment & Business News 2013