UK factories slash price expectations and raise output forecasts
This adds to signs of cooling price pressure ahead of the Bank of England’s Aug 1 interest rate announcement
BRITISH manufacturers’ expectations for price rises in the next few months fell to their lowest since late 2020, and they ramped up forecasts for output too, a survey from the Confederation of British Industry (CBI) showed on Thursday (Jul 25).
The CBI’s gauge of average prices for the next three months dropped to +2 from +20 in June, the lowest reading since December 2020.
The survey added to signs of cooling price pressure in the economy ahead of the Bank of England’s Aug 1 interest rate announcement, although policymakers are worried by wage growth and services sector inflation.
New orders contracted at a faster rate in July, although manufacturers’ expectations for output rose at the fastest pace since March 2022.
“The near-term outlook for the sector remains positive amid an ongoing recovery in the wider UK economy,” said Ben Jones, CBI lead economist.
While quarterly data from Thursday’s survey showed a drop in business confidence over the past three months, Jones said it may prove to be a lull.
“The share of manufacturers working below capacity has fallen sharply over the last quarter, feeding through to a more positive outlook for both hiring and investment.” REUTERS
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