British manufacturers see exports rise
A surprise surge in overseas demand for British-made goods lifted export order books to their highest level in more than a decade, new figures showed today.
The CBI’s latest industrial trends survey in the UK showed a balance of plus 3% of manufacturers reporting export orders were up in November compared with minus 11% in October.
It was the first positive balance since February 1996 and the highest level since August 1995.
The news came as a shock to industry analysts and helped the overall factory order book recover from a balance of minus 20% in October to minus 6% this month.
Upward pressure on inflation was also shown in the survey as more firms said they expected to raise their prices in response to higher costs.
Ian McCafferty, CBI chief economic adviser, said: “This month has left many businesses pleasantly surprised. Overseas demand for British-made goods bounced back and total order books have returned to the levels of the summer.
“Companies expect to increase prices at a slightly faster rate, to recover some of the margins squeezed by high costs, but they also expect output to ease.”
The surge in demand has left analysts scratching their heads as they consider why global customers have turned to the UK for their products at a time when the strength of the pound is increasing.
Ross Walker, an economist at Royal Bank of Scotland, said: “UK industrial orders rebounded in November, almost fully reversing October’s surprise losses. On the basis of this survey, overseas demand is at its most robust for over a decade – notably in the EU, the destination for over half of UK manufactured exports.”
However, optimism about the future is not strong, with a balance of only plus 5% of firms expecting manufacturing output to rise over the next three months.
Mr McCafferty said: “The sector has enjoyed a year of recovery, but how long this can continue remains in doubt. Growth has eased in the Eurozone and the US and, with a moderate outlook for 2007, it seems unlikely growth will be sustained.”
