The manufacturing PMI data for April earlier reflected a good uptick in overall business activity. However, it belies the underlying situation as the “better” conditions were largely driven by firms bringing forward orders. The frontloading is mostly due to wanting to obuild safety stocks in anticipation of rising prices and supply constraints.

The latest CBI data is more telling about business sentiment and things aren’t looking that great. The index for output volume expectations for the next three months sees a marked decline to -20, down from -3 in the previous report.

Meanwhile, optimism about the business situation and export prospects fell at the quickest pace since the onset of the Covid pandemic.

Adding to that, output price expectations jumped up to +32 in April as compared to +12 in March. The surge higher represents the biggest one-month jump since CBI records began in 1975. Ouch. And one can reasonably expect this to eventually be passed down the line to consumers via prices charged.

The quarterly survey also reveals that firms’ intentions for spending on buildings, plant & machinery, training are at the weakest since April 2020 as well. And that unit costs are expected to climb at the fastest pace in over three years in the coming quarter.

All in all, it points to likely struggles in the UK industry as higher price pressures start to bite and compound towards demand conditions at some point. The BOE will be keen to avoid stagflation talk for the most part but if things stay this way and the Middle East war drags on, you can bet that there will be growing murmurs about this issue in the months to come.