Manufacturing exporters recorded their second-strongest order book performance of the past year this month as the weaker pound continues to benefit parts of British industry, a new survey has found.
A fifth of firms said order books were above normal, pushing the balance of firms reporting stronger than usual exports to a positive reading of 11 per cent, according to the Confederation of British Industry’s (CBI) poll of industry, published today.
The CBI’s measure shows that export order books have surged in the past year despite weak official figures: the index tracking exporters shows orders far above long-term averages of negative 19 per cent.
Meanwhile, some 42 per cent of manufacturers reported that the volume of output over the last three months has increased, with 38 per cent expected further increases in the coming quarter.
Anna Leach, CBI head of economic intelligence, said: “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.”
However, while the weak pound since the Brexit vote has likely made British-manufactured products more attractive for foreign buyers, economists have been puzzled by the lack of pick-up in government's measures of UK industry. Industrial production rose by only 0.3 per cent year-on-year in June after two months of falling production.
The CBI survey has usually been relatively highly correlated with industrial production since it started in 1995, suggesting the current divergence will be resolved in the coming months.
The figures show that the weak pound is “a help, not a hindrance” for some firms, according to Martin Walder, vice president of industry at manufacturer Schneider Electric, although firms will need to invest if the devaluation is to produce a more durable boost to production.
Walder said: “Now more than ever with the weak pound, UK manufacturing has an opportunity to compete with other major economies, who have far exceeded our adoption of robotics and autonomous systems thus far.”
The survey also showed signs that inflationary pressure spurred by the fall in the value of the pound may not have completely passed through.
Expectations for selling prices bounced back to a positive balance of 19 per cent in August, after retreating to a nine-month low in July.