CBI Business Optimism Index

The CBI Business Optimism Index is the quarterly mood gauge for UK factories from the Confederation of British Industry Industrial Trends Survey, running since 1958. Each quarter a few hundred manufacturers say if they feel more optimistic, less optimistic or unchanged versus 3 months ago. The headline balance, the share more optimistic minus the share less optimistic, measures change in mood, not the level of conditions or actual output. It covers manufacturing only, so it cannot stand for whole economy confidence and can move against factory activity.

Fieldwork runs for about 4 weeks and ends around the middle of January, April, July and October. Results are published in the last week of each survey month with no stated release time. Each release combines that month Industrial Trends Survey findings with quarterly detail on orders, output, jobs, prices, costs and stocks. It also adds export optimism for the year ahead, competitiveness, investment plans, limits on output and capacity, published once as final whole numbers.

Sentiment follows demand and factory conditions captured across the quarterly detail.

• Business optimism: headline mood on the general business situation versus 3 months ago.
• Export optimism: forward view on export prospects for the year ahead.
• Output volumes: what factories produced in the past 3 months and expect in the next 3 months.
• Orders: total, domestic and export demand behind the mood.
• Jobs and prices: hiring trends plus domestic prices, export prices and unit costs.
• Plans and constraints: spending plans, perceived competitiveness, limits on output, capacity and stocks.

In the round published July 26, 2016 output scored 16. Reports showed 30 in every 100 firms up and 14 in every 100 down, the fastest growth in 2 years. Total orders scored 9, the highest since July 2015. Only 5 in every 100 firms felt more optimistic and 52 in every 100 felt less optimistic. That gap gave minus 47, the lowest since January 2009 when the balance was minus 64. Export optimism fell to minus 11 and expected total new orders sat at 0. The lesson is that the balance tracks mood change, so weak sentiment can coincide with solid factory output.

1. Answers: Each firm says if it feels more optimistic, less optimistic or the same about the general business situation versus 3 months ago. Export optimism is asked separately for the year ahead.
2. Balance: The CBI takes the weighted share answering more optimistic minus the share answering less optimistic, in percentage points.
3. Seasonality: No seasonal adjustment is applied; respondents exclude seasonal variations themselves. Demand and orders drive replies, cited as important by 95 in every 100 and as the most important factor by 76 in every 100.
4. Example: If 27 in every 100 firms say more optimistic and 12 in every 100 say less optimistic, the gap is 15. That gives a balance of positive 15. This is an illustrative example only.