UK manufacturing exports rose to their highest level in two years in August, boosted in part by weaker sterling.
While the dramatically weakened pound is hitting Irish companies looking to sell their wares into the UK market, Britain’s factories are getting an export boost. But output growth eased back a little on the three months to the end of July.
It comes just weeks after a separate survey showed that manufacturing output fell to its lowest level in three years, amid widespread reports that the pace of business activity had been dented by the June 23 referendum.
But Anna Leach, the head of the CBI’s economic analysis and surveys, said there are signs that the weakened sterling is helping the sector.
“But the pound’s weakness is a double-edged sword, as it benefits exporters but also pushes up costs and prices,” she said.
Supporters of Britain’s departure from the European Union have argued that a post-referendum decline in sterling was likely to help the economy, while opponents say the outcome of the June 23 vote could tip the country into recession.
The pound strengthened yesterday on the back of the data, dipping below the 86 pence mark. Last week it weakened to a three-month low against the euro of just over 87 pence.
The CBI report stated that despite the improvement in exports, total order books were largely unchanged, although remaining above the long-term average.
Almost a fifth of the 505 firms surveyed reported that orders were above normal, but close to a quarter said they were below.
However, economists cautioned against reading too much into the CBI survey.
Samuel Tombs, at Pantheon Macroeconomics, said export orders had jumped in August in the past two years only to fall back in September, and the overall reading from manufacturing was consistent with stagnation in output.
And the CBI’s Anna Leach said the effects of the referendum will be felt over the medium to long term.
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