Cool-down in May

20 March 2008

The bullishness of recent months receded a little in May, with respondents to the CE Barometer survey becoming a little less up-beat about the current state and future outlook in the industry. Sentiment about the current situation fell from a positive balance of +43,4% in April to +28,6%. Balance figures are arrived at by subtracting the number of respondents who said activity was worse from the number who said it was better. This is then expressed as a percentage of the total number of responses.

Asked about future business expectations, a balance of +52,4% said they expected activity to be higher in a year's time than currently, down slightly on April's result of +54,3%. While this is still a strong result, the trend for the future outlook is showing a gentle decline, with small falls from the high of +61.3% in January.

The more pronounced weakening in the current situation meant the arrow of our clock moved backwards in May, indicating that activity is perhaps not as close to peaking as the results of our April survey suggested. This is a little surprising given that the summer is approaching and one would expect activity to increase month-on-month. Having said that, the movement was quite slight, and within the +/-2,5% statistical margin for error that is inherent in a sample survey such as the CE Barometer.

But although sentiment has softened compared to previous months, respondents to the CE Barometer survey are still very positive about the industry. The overall climate – broad measure of responses to all the survey's questions – had a positive balance of +43,4%. This figure has not fallen below +40% since the survey was launched in December, and is obviously well above the 0% mark that would indicate a flat market.

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