British export orders hit 10-year high
British manufacturers were given a boost today as an industry survey showed export orders rose to a 10-year high this month.
For the first time since February 1996, as many firms said export orders were above normal as below, driven by renewed demand for capital goods, such as industrial engines and aerospace equipment, the CBI said.
But analysts warned the sector’s recovery remained fragile with domestic orders lower than expected and manufacturers unable to pass on the increases in metal and oil prices.
CBI chief economic adviser Ian McCafferty said the outlook for UK manufacturing is more encouraging than it has been for some time “on the back of the stronger performance of eurozone economies and continued growth in the US.
“However, while the signs are encouraging, the pick-up in domestic demand of earlier in the year has not been sustained and there is still little sign of an increasing appetite for British-made consumer goods. Until this happens, the recovery will remain fragile.”
Some 22% of manufacturers reported total orders were above normal compared to 34% below, producing a balance of minus 12.
This maintains the slowly-improving trend since the start of the year and compares to April’s minus 11, the strongest for two years.
James Knightley, of ING, said the market was expecting an improvement to minus nine and the figures highlight the fact that the manufacturing recovery is still largely export-led.
He said: “This report offers further support to our view that interest rates are unlikely to be raised aggressively.
“The market is looking for around 0.75% of rate hikes over the next 18 months. We see little need for any more than 0.25% and even that may not be needed if we are correct in predicting a global slowdown in 2007.”
Jonathan Said, senior economist at the CEBR, said: “The markets are unlikely to worry about today’s UK data, because the manufacturing sector remains on course to end its recession.”
