Exports drive UK factory orders and output
Buoyant exports boosted British manufacturers in the second quarter, and firms expect demand to remain strong in coming months, a survey has found.
The Engineering Employers’ Federation’s (EEF) quarterly Manufacturing Outlook also showed that firms had taken a hit on their profit margins as they had not been able to pass on soaring costs to their customers.
Manufacturing had been the one bright spot in an otherwise lacklustre UK economic recovery, but the trade body’s survey is at odds with recent purchasing managers’ surveys which have indicated the sector may now be running out of steam.
A balance of 28 per cent of manufacturers said they had increased output in the last three months, up from 25 per cent in the EEF’s first quarter survey, published in March.
And a balance of 30 per cent of firms reported a rise in new orders, up from 20 per cent in the first quarter.
“Our survey continues to show underlying strength in output and orders,” said EEF chief economist Lee Hopley. “Providing buoyant demand from overseas markets holds firm, we should see growth maintained through the rest of the year.”
The figures, while strong, are unlikely to alter the view that the Bank of England will hold off raising interest rates for the next few months until policymakers are more confident about the strength of the economy.
The central bank has kept interest rates at a record low 0.5 per cent for more than two years – the longest period of steady rates since World War Two – and many analysts do not expect it to make its first post-crisis hike until early next year.