Factory orders at highest in 30 years

FACTORY ORDERS have hit their highest level in nearly 30 years, according to a monthly Confederation of British Industry survey which might encourage Bank of England policymakers who favour an interest rate hike.

The CBI said its factory order book balance jumped to +16 in June, its highest level since 1988. Economists had expected a weaker reading of +7 compared with +9 in May.

Export order growth was its strongest in 22 years, the CBI said, helped by the fall in the value of the pound that was triggered by last year’s Brexit vote.

The strong performance by manufacturers will be noted by the BoE, where three members of the eight-strong Monetary Policy Committee last week voted to raise rates, citing among other factors a pick-up in exports and investment which could help to offset a squeeze in spending for domestic consumers.

BoE Governor Mark Carney said he wanted to see how the economy coped with uncertainties on Brexit in the coming months before considering a rate hike.

Philip Shaw, an economist with Investec, said the CBI survey could provide marginal support for the case for a rate hike.

The CBI survey showed factory output in the past three months slowed back to a level last seen in January while expectations for the next three months remained strong.