U.K. Factories Mark Brexit Birthday With Orders at 30-Year High
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CBI’s monthly index of export demand also improved in May
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U.K. began the formal talks on exiting the EU this week
Britain’s factories saw their order books jump to the highest in almost 30 years this month, with growth across most sectors and export demand improving.
The positive readings from a Confederation of British Industry survey come in the week the U.K. began its formal exit talks with the European Union. It’s been a year since the country voted to leave the bloc, triggering a sharp drop in the pound.
The findings may help lift optimism in the economy, which is under pressure from faster inflation and slumping consumer spending. U.K. economic growth is forecast to pick up only modestly this quarter, to 0.3 percent from 0.2 percent at the start of the year, according to Bloomberg’s latest monthly survey.
The CBI orders index jumped to 16 in June, the highest since 1988, from 9 in May. Its export gauge rose to 13, the strongest reading in 22 years. While a measure of output declined, the pace of growth remained “robust” and firms expect it to accelerate in the coming months.
The report also revealed the continued pressure on inflation from the weaker pound. Expectations for output prices were elevated this month, though below their peak in February.
Concern about consumer-price inflation has prompted some Bank of England policy makers to vote for an interest-rate increase. Inflation was close to 3 percent last month, above the central bank’s 2 percent target, and is expected to push higher.
While the acceleration in price growth is currency driven, and the hawks at the BOE remain in the minority, signs of strength in the economy could help to shift the balance more in their favor.
— With assistance by Mark Evans