U.K. Manufacturing Orders Stay at Strongest Level Since 1988By
CBI factory survey shows export demand well above average
Trade-weighted sterling is 11% below level before Brexit vote
U.K. factories enjoyed another month of strong demand in December, with orders staying at their highest level in almost three decades.
The Confederation of British Industry said its monthly factory index was at 17 for a second month, matching the highest level since August 1988. The measure for export orders slowed to 16, from 20 in November, but remained far above its long-run average.
U.K. factories are benefiting from the twin effects of a Brexit-driven weaker pound and a resurgence in global trade. The CBI said 14 of 17 sub sectors reported higher-than-usual orders in December, and demand was particularly strong for motor vehicles and transport equipment, and mechanical engineering.
The CBI survey chimes with a separate report from accountancy firm BDO LLP, which said U.K. export growth rose in the fourth quarter, outperforming its European peers in part because of sterling. On a trade-weighted basis, the pound is 11 percent below its level before the Brexit referendum in 2016.
The export performance is in contrast to the domestic economy, where the currency’s depreciation has pushed up import costs and inflation. That’s hit consumers, who’ve reined in spending this year.
According to the CBI, firms expect output growth to slow over the coming quarter, thought it will stay higher than average. They also plan to increase prices further over the next three months. The survey of 371 firms was conducted Nov. 22-Dec. 12.
— With assistance by Harumi Ichikura, and Mark Evans