The Scotsman

Factories get export boost from Brexitstun­g pound

● Latest snapshot shows solid growth in output in July ● But economists warn of continuing cost pressures

- By HOLLY WILLIAMS and SCOTT REID

Britain’s factories enjoyed a welcome bounce-back last month thanks to the strongest surge in export orders for more than seven years.

The closely watched Markit/ Cips UK manufactur­ing purchasing managers’ index (PMI) showed a reading of 55.1 last month, up from 54.2 in June and higher than expected. A reading above 50 indicates growth.

The pound rose against the dollar in the wake of the report, which noted that foreign demand for UK manufactur­ing output rose at the fastest pace since April 2010.

It was also the secondstro­ngest rate in the history of the survey as the Brexit-hit pound has boosted overseas demand for British-made goods and services.

The reading marked the first pick-up in growth for three months and offered some cheer for the wider economy.

Rob Dobson, director at report compiler IHS Markit, said the manufactur­ing sector had kicked off the third quarter on a “solid footing”.

He said: “Although the exchange rate remains a key driver of export growth, manufactur­ers also benefited from stronger economic growth in key markets in the euro area, North America and Asiapacifi­c regions.

“Continued expansion is also still filtering through to the labour market, with the latest round of manufactur­ing job creation among the best seen over the past three years.”

The report also said pricing pressures eased further for manufactur­ers, with input prices rising at their weakest pace in over a year.

This gives hope that soaring UK inflation may begin to wane, relieving pressure on cash-strapped consumers.

It comes ahead of the Bank of England’s interest rates decision tomorrow, with speculatio­n mounting over whether policymake­rs will vote for a rise to offset surging inflation.

Alan Maudsley, head of corporate developmen­t for Barclays in Scotland, said: “Manufactur­ers continue to grind out positive results helped by a recovering global economy and a weaker pound, allowing the industry to post the strongest rate of export growth for more than seven years.

“However, despite a slight easing on the cost side in July, cost challenges are still circling and margins remain under pressure.”

He added: “Higher prices may take their toll on domestic demand which has been fuelling growth in the first half of the year, so the timing of this return to strong export growth could not be better.” Bakery chain Greggs has bolstered sales despite seeing profits take a hit from costs linked to restructur­ing the business. The firm yesterday said like-for-like sales rose 3.4 per cent in the first half of this year, thanks to a strong customer appetite for salads and breakfast food. However, pre-tax profits dropped 24 per cent to £19.4 million. Chief executive Roger Whiteside, pictured, said: “The business has traded in line with our plans during the first half of the year.”

 ??  ??

Newspapers in English

Newspapers from United Kingdom