UK industrial orders for May fall at quickest pace since 2020 on higher cost pressures
Complete. Here is the key summaryThe CBI monthly manufacturing order book balance for May fell to -41, the lowest since September 2020, amid rising cost pressures. The expected selling prices gauge increased to +38, the highest since February 2023. While UK PMI data indicated stable manufacturing conditions, it was driven by temporary demand increases. The ongoing conflict in the Middle East is exacerbating energy costs and supply chain disruptions, posing further challenges for manufacturers facing weak demand.
The CBI monthly manufacturing order book balance for May dropped to -41, following the -38 reading in April. That marks the lowest such estimate since September 2020 amid surging cost pressures. Of note, the gauge of expected selling prices rose to +38 (previously +32) - marking the highest since February 2023.
While the UK PMI data report earlier showed that manufacturing conditions held up in May, it came with a big caveat. Most firms reported a temporary demand increase due to frontloading activity in order to beat price hikes and potential supply disruptions.
As such, the CBI data above is a better signal of underlying conditions and the actual demand environment.
"Against an uncertain global backdrop, the conflict in the Middle East is feeding through to higher energy costs and renewed supply chain disruption, adding another layer of challenges for manufacturers, who are already grappling with weak demand."