The CBI industrial trends survey showed that manufacturing activity softened in August. The total orders balance declined to -21, a 8 month low, from -6 in July, much weaker than the consensus estimate of -10. The export orders balance fell to -17 from -9 in July, as exporters are feeling the brunt of the weakening of the outlook in the euro area, their main trading partner. However, domestic order balances weakened even more. Also output expectations were scaled back. The CBI survey is quite volatile and painted a somewhat stronger picture in recent months than other indicators like the PMI survey. Therefore, the results should be interpreted with caution, as some catching up with other surveys may have taken place. Nevertheless, the survey points to some downside risks.
Public sector borrowing continues to fall short of expectations. In July, Public Sector Net Borrowing (PSNB) amounted to -L1.8B versus expectations of -L3.2B. So the surplus, which is usually reported in July owing to corporate receipts , was smaller than expected. The underperformance of finances compared to the budget plan increases. Cyclical factors certainly play a role, but it is not clear whether also underlying public finances are underperforming.