Surging factories give a lift to pound

FACTORY output is rising at the fastest rate for more than three years as the weak pound boosts exports, according to a report.

The CBI found 41pc of manufacturers saw production rise in the past three months while 12pc said it fell.

The gap between those doing well and doing badly was the widest since December 2013 as export orders flooded in.

The upbeat figures pushed the pound back above $1.30, giving families planning trips to the US more bang for their buck.

Rain Newton-Smith, chief economist at the CBI, said: ‘The summer sun has come out early for Britain’s manufacturers.

‘Robust demand both at home and abroad is reflected in strong order books, and output is picking up the pace.’

Analysts said the rise in factory output suggested the slowdown in the economy at the start of 2017 is likely to be shortlived. Official figures this week showed retail sales rose by a better-than-expected 2.3pc last month while the number of people in work has reached a record high and unemployment is at a 42-year low of 4.6pc.

Ruth Gregory, UK economist at Capital Economics, said the latest health check provided ‘another reason to be optimistic that the economy has regained some pace’ in the second quarter of the year.

It is feared rising prices and muted wage growth will dent consumer spending this year, causing a slowdown.

But Kallum Pickering, an economist at Berenberg, said: ‘When prices rise faster, consumers often open their wallets more.’