Slowdown in exports prompts a drop in factory orders
Factory orders fell to their weakest for almost two years this month, after being hit by a slowdown in exports, according to a CBI survey.
The figures showed 26% of firms in Britain reported total order books were below normal, while 19% said they were above normal, giving a balance of minus 7% - the lowest since July 2013.
The latest CBI Industrial Trends Survey reported that export orders slipped back to a balance of minus 17, following two months of improvement.
Looking ahead, manufacturers became slightly more optimistic about output volumes in the coming three months, posting a balance of plus 13. However, the report said firms expect competitive pressures to remain and expect prices to fall over the next three months, producing a balance of minus 7%, the lowest since November 2009.
CBI's director of economics Rain Newton-Smith said: "Output and overall orders are still doing better than average but hopes that export demand would start to drive forward have not yet been fulfilled.
"Improving momentum in the eurozone is being offset by the effect of the strengthening pound on UK manufacturers' overseas sales and margins. On top of that, the ongoing Greek saga is causing uncertainty."
Howard Archer, chief UK and European economist at IHS Global Insight, said the CBI figures were "mixed".
He said: "Export orders are being pressurised by sterling's strength against the euro while the Greek crisis could well be leading to a wariness of some eurozone clients to place major orders."