U.K. Factory Exports Plunge as Euro-Area Weakness Alarms BOEFergal O’Brien
U.K. factories saw export demand drop the most in more than 1 1/2 years this month, bearing out the Bank of England’s concerns that a stagnant euro-area economy is proving a drag on the recovery.
The Confederation of British Industry said its monthly factory orders index fell to minus 4, the lowest since October, from 11 in August. The export component plunged to minus 24, the weakest reading since January 2013.
The report comes a day after the BOE said in the minutes of its September policy meeting that the threat to the U.K. from the currency bloc had increased. For the majority on the nine-member Monetary Policy Committee, that added to the case for keeping the benchmark interest rate at a record low.
“The accumulating evidence of the weakness in the euro area had been the most significant development during the month,” the BOE said in the minutes. “Even if some of the weakness, particularly in Germany, turned out to be temporary, it was possible that the underlying pace of the recovery in the euro area was slower than the committee had estimated.”
The CBI said its gauge of output over the past three months rose to 15 in September from a 10-month low of 12 the previous month. Output expectations for the next three months slipped to 27 from 31.
The survey of 488 manufacturers was carried out between Aug. 20 and Sept. 10.