Growth In SME Orders Expected To Fall

Smaller companies have seen production growth in the three months leading to the latest CBI SME survey due to stronger domestic and overseas demand and rebuilding stocks of goods. The total volume of new orders has grown over the quarter and exports were particularly strong. Weaker demand over the next quarter could cause it to stall as expected orders fall.

Stocks Of International Currency Reserves

Movements in UK Government net foreign currency reserves in June meant they increased by $435m to a level of $34.7bn or £23.26m compared with $34.3bn or £23.77bn at the end of May 2010. Gross reserves decreased by $654m to $71.1bn. The Bank of England's net foreign currency and gold holdings decreased by $3.06m to a level of -$3.98m. Gross foreign currency holdings at the Bank of England increased by $876m to reach a level of $24.2bn.

Business Investment Down In Euro And EU27 Areas

The gross investment rate of non-financial corporations in the EU27 zone was 20.3% in Q4 2009 from 20.6% in Q3 according to Eurostat. In the eurozone the rate was 20.4% in Q4 from 20.7% in the previous quarter. The gross investment rate of non-financial corporations in the eurozone fell as gross fixed capital formation fell 0.9% and value added grew 0.6%. Eurozone stocks of materials, supplies and finished goods continued to decrease for the fourth quarter in a row.

The business profit share of non-financial corporations in EU27 was 37.1% in Q4 2009 from 36.9% in 2008. The eurozone profit share was 37.9% from 37.5% in Q3 2009. The eurozone profit share of non-financial corporations increased as value added grew 0.6%. Wage costs plus taxes minus subsidies on production was unchanged.

Difficult Summer For Shops

The CBI tell us that shops are still having a bad time in the High Street as retail falls again for the third month in a row. Their forecast for August is no better. The results are mitigated by saying that the fall is no greater than the rises we saw in May and June and a lot better than the falls between July 2008 and March 2009. That's better than expected by a lot of people.

Sales volumes are down but not as much as expected. Stocks are adequate to meet demand even though they are below average for the thrid succesive month. Orders fell again and the outlook for all of these figures is more of the same in August.

When looking at the individual sectors, grocers are seeing strong growth, as are footwear and leather with its best result since August 2007. Hardware, china & DIY, and furniture & carpets are reported falls while household durables fall is slower than last year. Wholesalers sales volumes fell in the year to July. In particular it was a difficult month for industrial materials and builders' merchants wholesalers. Food and drink wholesalers however reported another month of strong growth.