UK factories slash price expectations and raise output forecasts

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.

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“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