UK manufacturers buoyant as export orders rise
The latest CBI survey of British manufacturers has shown a rise in export orders on the back of sterling’s weakness, with almost a third reporting orders at above normal levels for the time of year.
23 August 2017
Weak sterling leads to rise in export orders
After a disappointing July, the survey of 432 manufacturers found that total order books were strong in August, mainly thanks to a rise in export orders on the back of continuing weakness in the value of sterling against the dollar and euro.Publication of the survey coincided with a visit by Prime Minister Theresa May to Alexander Dennis Ltd (ADL), the maker of the UK's iconic, red, double-decker buses, which has just secured a £44 million finance deal to sell the vehicles to ease congestion in Mexico CityHailing the deal as an example of the “truly global Britain” the government was building, Mrs May said a £1.7 billion package of taxpayer-funded support over the past year had helped 137 firms expand and win overseas contracts.“We are building a truly global Britain by helping UK companies win multi-million pound contracts to export their products across the globe, and supporting high-value jobs here in this country,” she said.“Since last summer, the government has provided over £1.7 billion of backing for contracts for goods and services and will continue to maximise investment in the UK and seek exciting new opportunities ahead.“From exporting iconic red double-decker buses to Mexico, cutting-edge MRI systems to Australia or rail equipment to Bangkok, each one is an example of a great British success story and shows the UK is leading the way as a great, global trading nation.”Export triumph for ADL's iconic double-decker bus
Colin Robertson, chief executive of ADL, commented, “It is hugely exciting to know that ADL's signature red double-decker buses will soon be transporting Mexico City's residents in style and comfort.“As a global double-decker leader with fleets of our vehicles across the world, we see the positive impact these vehicles can have in improving the transport infrastructure, congestion and air quality in the world's busiest cities.“Our ability to offer finance from UK Export Finance in Mexican pesos was a significant benefit to our buyer, helping us win this major contract.”The CBI survey found that growing export orders were recorded in 10 of the 17 manufacturing sub-sectors, led by mechanical engineering and aerospace.Related news:
- UK economy on course to recover from first-half ‘trough’
- UK ministers in global drive for new trade deals
- CBI heartened by prospects of Brexit trade deal with US
Anna Leach, head of economic intelligence at the CBI, said, “There are further signs that exporters are feeling the benefit from the lower pound in this month’s figures, and output growth is expected to power on over the coming quarter.“But after a brief pause last month, expectations for selling prices have rebounded, indicating that the squeeze on consumers is set to persist. We expect CPI (Consumer Price Index) to top out at around three per cent towards the end of this year and remain close to that level during 2018, as the effect of the weak pound continues to feed through.”
CBI manufacturing survey findings:
- 30 per cent of manufacturers reported total order books to be above normal, and 17 per cent said they were below normal, giving a balance of +13 per cent – above the long-run average of –14 per cent
- 22 per cent of firms said their export order books were above normal, and 10 per cent said they were below normal, giving a rounded balance of +11 per cent – well above the long-run average of –19 per cent
- 42 per cent of businesses said the volume of output over the past three months was up, and 12 per cent said it was down, giving a balance of +30 per cent – above the long-run average of +3 per cent
- Manufacturers expect output to grow at the same robust pace in the coming quarter, with 38 per cent predicting growth, and 7 per cent a decline, giving a rounded balance of +30 per cent – above the long-run average of +8 per cent
- Expectations for growth in average selling prices for the coming three months were higher in August (+19 per cent) than they were in the month before (+9 per cent) – above the long-run average of +2 per cent
- 15 per cent of firms said their present stocks of finished goods are more than adequate, whilst 11 per cent said they were less than adequate, giving a balance of +4 per cent – below the long-run average (+13 per cent)
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