UK manufacturing exports rise on boost from weaker pound
The pound’s slump since the Brexit referendum boosts export orders but it also means costs are climbing fast, the CBI says.
Monday 24 October 2016 13:07, UK
UK manufacturing exports have grown at their fastest rate in more than two years, enjoying the effects of the pound's record lows.
The latest Confederation of British Industry's industrial trends survey shows a growth in output and orders during the last quarter.
Some 29% of firms reported an increase in total orders, with 20% reporting a decrease.
One in five firms said they were more optimistic about the general business situation than three months ago, but 28% were less so.
Sterling has fallen by almost 20% against the dollar since the UK voted to leave the European Union in June.
But the CBI warned the weakness was "a mixed blessing", adding that it had meant the price of average unit costs had climbed at the fastest pace seen in more than three years.
Just under half of those surveyed - 47% - said the depreciation of the pound had impacted their business negatively, while 32% said the impact had been positive.
The remainder said they were either neutral or did not know.
Rain Newton-Smith, the CBI's chief economist, said: "Manufacturers are optimistic about export prospects and export orders are growing, following the fall in sterling.
"However, the weaker pound is also feeding through to costs, which are rising briskly and may well spill over into higher consumer prices in the months ahead."
The survey showed manufacturers' expectations for domestic price inflation at their highest since April 2009.
There were also concerns about a shortage of skilled labour, with almost a quarter of 459 manufacturers surveyed saying this could limit output over next few months.
Ms Newton-Smith said: "Access to skills clearly remains a high priority, so manufacturers will be looking to the Government to implement a new migration system that meets the needs of business while responding to clearly-stated public concerns.
"Ultimately, all businesses need greater clarity from the Government on the fundamental issues of skills and barrier-free access to EU markets as soon as possible."