Exports Increasing at Fastest Pace Since at Least 1995, Manufacturers Say
A U.K. index of export orders rose to the highest in at least 15 years in the second quarter as a weaker pound bolstered demand for British goods in Europe and emerging markets, the Engineering Employers Federation said.
The number of companies saying export sales rose in the three months through June exceeded those reporting declines by 23 percent, compared with 3 in the first quarter, the EEF and BDO Stoy Hayward LLP said in a quarterly survey published today in London. That’s the highest since the survey began in 1995. A gauge of domestic orders also rose to a record.
The pound has fallen about 23 percent on a trade-weighted basis since the start of 2007, making exports more competitive. The U.K. economy grew 0.3 percent in the first quarter, aided by biggest jump in manufacturing for four years. The EEF raised its forecast for 2010 factory output, citing the growth in orders.
“Manufacturers are pulling in more export orders on the back of a recovering world economy, and a better outlook for the domestic market is giving companies some confidence to recruit,” Lee Hopley, chief economist at the EEF, said in the report. “But manufacturers are very aware that economic headwinds could still pick up again.”
Factory production, which accounts for about 13 percent of gross domestic product, will grow 3.5 percent this year, the EEF said, more than double its previous projection for a 1.5 percent increase. The economy will expand 1.1 percent, it said.
‘Buoyant’ Emerging Markets
Producers of chemicals, electronics and non-metallic minerals registered the highest levels of increased output in the past three months, the EEF said. Survey responses showed sales to manufacturers in the European Union increased and anecdotal evidence indicated demand from emerging markets was “buoyant,” Hopley said.
The number of companies saying domestic sales rose in the second quarter exceeded those reporting declines by 24 percent. That’s up from minus 4 in the previous three months and the highest since the survey began.
The index of employment rose to 9 in the second quarter from minus 6, the first reading above zero in two years. The industry will still shed 80,000 jobs this year after cutting 195,000 in 2009, Hopley said.
U.K. factory production probably rose for a third month in April. The median estimate of 25 economists in a Bloomberg News survey is for a gain of 0.5 percent after a 2.3 percent jump in March. The Office for National Statistics is due to release the data on June 11. The trade gap for that month probably narrowed to 7 billion pounds ($10.2 billion) from 7.5 billion pounds the previous month, according to a separate survey.
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