United Kingdom export orders reached a two-year high in August after goods became cheaper for overseas buyers thanks to the slump in the value of the pound, new figures show.
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The Confederation of British Industry’s gauge of export orders hit its highest mark since August 2014, at -6%, according to the business lobby group’s Industrial Trends survey.
It added that the measure of output expectations for the three months ahead was plus 11 in August, rising from plus 6 the month before.
Supporters of Britain’s departure from the European Union have argued that a post-referendum decline in sterling was likely to help the economy, while opponents say the outcome of the June 23 vote could tip the country into recession.
The depreciation of the pound may prove to be a double-edged sword.
But Ms Leach said the most significant effects of Brexit would be felt in medium to long term. “Therefore firms need to see ambitious decisions in the Autumn Statement that will secure the UK’s economic future as changes to trade, regulation and access to skills loom on the horizon”. Respondents expect to raise their prices at the fastest pace since February 2015, possibly in response to higher imported raw material costs, with coke and petroleum producers having the steepest expectations for output price inflation, the survey showed.
The initial reading for eurozone composite PMI rose to 53.3 for August, up from 53.2 in July, the latest data compiled by Markit revealed.
For his part, Samuel Tombs, chief United Kingdom economist at Pantheon Macroeconomics said: “August’s CBI Industrial Trends Survey suggests that rising export orders are cushioning the blow to manufacturers from the slump in domestic demand, but we would caution against placing much weight on this erratic survey”.
Although the increase in export orders was helping “cushion the blow” from reduced United Kingdom demand, Samuel Tombs, chief United Kingdom economist at Pantheon Macroeconomics, urged for caution over the data.
Howard Archer, chief economist at IHS Global Insight, said: “There are some serious dangers lurking for the manufacturing sector following the Brexit vote”.
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‘Even if the CBI’s export orders balance is right, the total – domestic plus export – orders balance only is consistent on past form with stagnation in manufacturing output’.
