UK export orders rise to two-year high eyeing pound’s decline due to Brexit

Export orders in the United Kingdom rose to reach a two-year high following depreciation of pound due to the Brexit vote. Sterling's fall in value drove UK manufacturers' export order books to multi-year highs, the results of a widely-followed survey revealed, even as they prepared to raise prices in a bid to pass-on their own now higher costs.

An index of foreign demand rose to minus 5 this month, the highest since August 2014, from minus 22 in July, according to a survey published Tuesday by the Confederation of British Industry in London. That was better than the print of -10 expected by the consensus, as 19 percent of businesses reported total orders were above normal in August, versus the 18 percent who reported the same the month before.

Volumes of output were also lower at 11 percent, down from 16 percent in the month before but even so ahead of the 6 percent expected by economists. The survey's sub-index referencing companies' expectation for their average prices over the next three months came in at +8 percent, its highest since February 2015 and up from +5 percent in July.

Of the companies canvassed by CBI, 17 percent expected to raise prices and 8 percent to cut them. Output growth was projected to remain steady over the following three months, CBI said.

Further, The CBI said 13 of the 18 industrial sub-sectors surveyed between July 26 and Aug. 12 reported better overseas orders than previous month. Its total orders index slipped to minus 5 in August from minus 4 in July.

The improved readings on the export side follow last month’s quarterly survey, which found U.K. manufacturers’ confidence at its lowest since 2009.

"It’s good to see manufacturing output growth coming in stronger than expected, and some signs that the fall in sterling is helping to bolster export orders," said Anna Leach, Head, Economic Analysis and Surveys, CBI.