U.K. Factory Output Highest Since 2013 as Pound Effect Kicks In

  • Export orders rise on pound’s slump, overseas pickup: EEF/BDO
  • Uncertainty from Brexit, Trump, elections pose risk to outlook

A measure of U.K. manufacturing output jumped to the most since 2013 this quarter as the pound’s slide bolstered demand and confidence climbed, according to a survey by industry group EEF and advisers BDO LLP.

Export orders surged, fueled by sterling and a pickup in key overseas markets, the report published on Monday said. Business confidence, which dropped in the wake of Britain’s vote to leave the European Union, rebounded to the highest since 2015.

“The post-referendum wobble that defined U.K. manufacturing’s performance in the second half of 2016 has been left firmly behind,” said EEF chief economist Lee Hopley. “This positive trend looks set to continue in the short to mid-term, but the longer-term outlook is more unsettled.”

While the pound’s 18 percent depreciation since the Brexit vote has benefited some exporters, it’s also pushing up producers’ costs. That’s prompting price increases that are largely being borne by domestic customer, according to the report. 

IHS Markit’s index of U.K. manufacturing last week showed growth slowed for a second month in February and a gauge of input prices slipped from a record high.

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