Weaker pound sees rebound in export orders for sector
BRITAIN’S MANUFACTURERS have reported rising demand driven by a rebound in export orders on the back of a weaker pound.
The latest Confederation of British Industry (CBI) industrial trends survey showed that 30 per cent of manufacturers said their total order books were above normal in August, compared to 17 per cent that experienced lower levels over the same period, resulting in a balance of plus 13 per cent.
That is above the long-run average of minus 14 per cent, and July’s balance of 10 per cent.
Those figures were driven by stronger export order books, as a rounded balance of 11 per cent of manufacturers reported abovenormal overseas demand in August, compared to 2 per cent in July. The study concluded that output growth remained strong and broad based and is expected to remain so over the next quarter.
Anna Leach, the CBI’s head of economic intelligence, said the Brexit-hit pound – which has made UK goods cheaper for overseas buyers – is to thank for the rise.
“There are further signs that exporters are feeling the benefit from the lower pound in this month’s figures, and output growth is expected to power on over the coming quarter.
“But after a brief pause last month, expectations for selling prices have rebounded, indicating that the squeeze on consumers is set to persist.”
The poll – which surveyed 432 businesses – found that a balance of 19 per cent of manufacturers are expecting a rise in output prices over the next three months, which is up from a balance of 9 per cent in July.
But rising output prices could spell further trouble for British consumers.
Rising factory gate prices have been passed down to shoppers in recent months, leaving household finances squeezed by climbing inflation, which came in at 2.6 per cent in July.
“We expect CPI (Consumer Price Index) to top out at around 3 per cent towards the end of this year and remain close to that level during 2018, as the effect of the weak pound continues to feed through,” Ms Leach said.
The upbeat message from the CBI on growth echoes that found in other business surveys, but contrasts with official data, which showed manufacturing output contracted by 0.6 per cent in the three months to June, reflecting weaker car production.