The CBI’s (www.news.cbi.org.uk) latest Industrial Trends survey shows that a fall in export demand slowed the recovery in the UK’s manufacturing sector in June, although output growth and total orders are still above their ‘long-run’ averages. Competitive pressures remain intense in the sector — over the next three months, manufacturers expect the greatest fall in prices since 2009.

Rain Newton-Smith, the CBI’s director of economics, 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 euro-zone is being offset by the effect of the strengthening pound on UK manufacturers’ overseas sales and margins. On top of that, the on-going Greek saga is causing uncertainty. In the forthcoming Budget, the Government should look to help struggling exporters break into key markets.”

Howard Archer, chief UK and European economist at IHS Global Insight, described the CBI figures as “somewhat mixed”. He said: “Export orders are being pressurised by sterling’s strength against the euro, while the Greek crisis could well be making some euro-zone clients wary of placing major orders. Nevertheless, overall orders are still above their long-term average levels, while the CBI balances for recent output growth and for production expectations
over the next three months are also decent.”