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British Manufacturing Sentiment Improves

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The manufacturing sector in the UK is showing a slightly more positive outlook according to the Confederation of British Industry (CBI) who have just released this month’s CBI Industrial Trends Survey for Orders. This sentiment indicator is compiled from qualitative interviews with executives in the manufacturing sector, the reading of 0 for the month of May is an improvement over April’s -1 but is a long way off the hoped for improvement to a reading of 4. Due to under investment the British manufacturing sector has been lagging behind other areas of this recovering economy that is deriving it’s growth from areas such as consumption and house price expansion.

Total Business Investment data also released this morning confirms the lack of investment in UK industry. Year on year the growth in Total Business Investment during Q1 remained at the 8.7% level reported for the final quarter of 2013. However quarter on quarter there is some evidence of growth in industrial investment, this data shows a pick up to 2.7% from 2.4% the previous quarter, markets welcomed this as a fall to 2.3% had been anticipated. The bulk of this new investment is likely headed toward the manufacturing sector of the economy, this is confirmed by the Index of Services figure also published this morning which showed this sector remaining steady at 0.9% quarterly growth.

Overall UK growth is performing well as demonstrated by the preliminary GDP figures just published by National Statistics. These show that during the first quarter of this year the economy expanded by 3.1%, this year on year figure remained in line with both expectations and the previous quarters report. The quarter on quarter version of the GDP figure showed a slight improvement from 0.7% growth to 0.8% expansion, markets had been fully expecting this 0.8% number.

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