Weaker pound boosts exports

MANUFACTURING output growth has hit a 22-year high as a weaker pound fuels demand for goods made in Britain.

A survey of nearly 400 firms by business lobby group the Confederation of British Industry said strong demand from domestic and overseas customers was prompting factories to take on more staff to handle booming export orders.

Jobs were added at the fastest rate for three years in the three months to July, when production lines were at their busiest since January 1995.

Sterling has weakened by 12 per cent against the US dollar and is down by more than 14 per cent against the euro since the Brexit vote in June last year, making exports such as cars more competitive. Factory bosses are at their most optimistic about future export growth for four decades and are preparing to ramp up spending in areas such as training and retraining. Manufacturing generates about 10 per cent of Britain’s economic output.

CBI chief economist Rain Newton-Smith said: “Output growth among UK manufacturers is the highest we’ve seen since the mid-’90s, prompting the strongest hiring spree we’ve seen in the past three years. Cost pressure is easing and firms are upbeat about the outlook for export orders. It’s great to see the benefits from the decline in sterling for UK exporters feeding through.”

Graham Toy, chief executive of the National Association of Commercial Finance Brokers, said that while a weaker pound was curbing consumer spending as prices rise faster than wages, exporters were “having a field day”.

He added: “Buoyant investment intentions tally with what our brokers are seeing on the ground, namely an appetite among small businesses to seek out the finance they need to grow.”

Howard Archer, chief economic adviser to the EY ITEM Club, said manufacturing survey results tended to be “appreciably stronger” than hard data from the Office for National Statistics, but agreed that the weakened pound and improved global demand “should buoy UK manufacturers competing in foreign markets”.