UK manufacturing soars thanks to weak pound and global recovery

A worker at the Brompton bicycle factory in London. The CBI’s June report said British export orders were rising. Photograph: Bloomberg/Getty

Britain’s manufacturers are enjoying the strongest demand for their products in almost 30 years as a recovering global economy and a weaker pound boost order books.

The monthly snapshot from the CBI found that export and total order books were both at their highest for decades – providing some hope that a stronger manufacturing sector would cushion the effect of higher inflation on consumer spending.

The employers’ organisation said that particularly strong performances by the food, drink, tobacco and chemicals industries had spearheaded a pick-up in orders in 13 of the 17 industrial sub-sectors tracked each month.

As a result, the balance of companies reporting that order books were above normal rose from +9 percentage points in May to +16 points in June – the highest since the height of the late 1980s boom in August 1988. The balance for export orders rose from +10 points to +13 points – the joint highest in 22 years.

But the CBI warned that manufacturers were still being affected by rising prices. The balance of companies expecting prices to rise in the coming months remained unchanged at +23 points between May and June, but was up from +1 point a year ago.

Rain Newton-Smith, the CBI’s chief economist, said: “Britain’s manufacturers are continuing to see demand for ‘Made in Britain’ goods rise with the temperature. Total and export order books are at highs not seen for decades, and output growth remains robust.

“Nevertheless, with cost pressures remaining elevated, it’s no surprise to see that manufacturers continue to have high expectations for the prices they plan to charge.

“To build the right future for Britain’s economy, manufacturers and workers, the government must put the economy first as it negotiates the country’s departure from the EU. This approach will deliver a deal that supports growth and raises living standards across the UK.”

Andrew Wishart, a UK economist at Capital Economics, said UK manufacturing was poised to record a strong performance in the second quarter of 2017. “Today’s strong survey supports our view that solid manufacturing and export growth will help to offset the slowdown in consumer spending growth this year,” he said.