Belfast Telegraph

Exports suffer due to strong pound and eurozone unease

By Roger Baird

UK factories saw export orders in March plunge to their lowest level for more than two years, impacted by a strong pound and eurozone uncertainty, figures have shown.

The pound plunged against the US dollar and the euro after the manufacturing data was released by the CBI.

A poll of 468 firms found total order books fell more steeply than expected from February's six-month high.

On exports, just 10% said orders were above normal, with 35% saying they were below, giving a rounded average of minus 26%, the lowest level since January 2013.

However, the report said output had been growing since August, and despite easing from last month, remained above the long-term average of minus 16%.

CBI director of economics Rain Newton-Smith said: "Our manufacturers lost some of their steam from last month, but they continue to move steadily along a decent growth track.

"Sluggish export performance seems to be a headache that won't go away, with a still subdued eurozone and headwinds from a stronger pound. But measures in the Budget to support exporters should be a welcome boost for the sector's longer-term prospects."

The pound has risen by 7% since the start of the year against the euro. Minutes from the Bank of England March policy meeting showed rate setters' concern that sterling strength might prolong ultra-low levels of inflation, due to imports being cheaper.

Capital Economics UK economist Paul Hollingsworth said: "Looking ahead, it is clear that exporters will struggle to make headways given sterling's appreciation and the weakness of demand in the eurozone.

"But with lower oil prices set to continue boosting manufacturers through lowering their input costs, and the domestic recovery to maintain a robust pace, we still expect growth in manufacturing output to regain some momentum over the coming quarters."

It comes as latest official figures show manufacturing here was continuing to grow strongly at the end of 2014. It was the only sector to show growth over the rolling four quarters, increasing by 4.6%.

And overall output was 3.7% higher than the same period in 2013.

Belfast Telegraph