A sharp drop in export orders reported by the CBI highlights the challenge facing George Osborne, as he seeks to improve Britain’s recent poor trade record.
The latest snapshot of manufacturing from the employers’ organisation showed that while order books for industry are still growing, companies are relying on strong domestic demand.
But with a rising pound making UK goods more expensive overseas, the latest CBI monthly industrial trends survey found that 18% of firms reported export order books above normal for the time of year while 27% said they were below normal.
The rounded balance of -10 percentage points in February compares with -1 point in January, and is feeding through into lower production in factories.
More than a third of firms (36%) said output rose over the past three months against 21% recording a fall. The CBI said that while growth remained strong it was the slowest in five months and a further easing is expected over the next quarter.
Anna Leach, the CBI’s head of economic analysis, said: “The picture in the manufacturing sector remains positive. Overall, demand continues to rise and output growth is robust.
“Growth in exports is crucial to rebalancing the economy and ensuring a sustainable recovery. Over the last few surveys, manufacturing export orders have underperformed relative to overall orders as the UK’s domestic recovery has caught hold more quickly than some of our key trading partners – most particularly, the eurozone.
via The Guardian
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