UK factory orders improve despite EU referendum looming closer

The United Kingdom factory orders for the month of June improved, strongly sidelining the European Union referendum, scheduled to take place this Thursday. Further, the improvement is the latest sign that a slowdown in the economy before Thursday's decision over Brexit (or not) might not be as sharp as some forecasts.

The June factory order book balance rose to -2 from -8 in May while a measure of export orders held steady at -14, data released by the Confederation of British Industry (CBI) showed Tuesday.

The CBI said the survey of 482 manufacturers showed the slight improvement was led by the food and drink and the motor vehicles and transport sectors.

"It may be that the growing uncertainty in the run-up to the EU referendum, combined with global risks elsewhere, has offset some of the benefits of a weaker currency at this time," said Rain Newton-Smith, Chief Economist, CBI.

Newton further mentioned that the recent fall in the value of pound has further helped to boost exports.

Britain's overall economic growth slowed in the first three months of the year and some other surveys have suggested a further deceleration ahead of the June 23 referendum. However, recent data on retail sales and the labor market have shown a stronger underlying picture than some of the gloomier forecasts, Reuters reported.

"The recent depreciation of trade-weighted sterling and a pick-up in global growth should improve the sector's external prospects later in the year," said Scott Bowman, Capital Economics.

Meanwhile, the CBI survey showed expectations for factory orders in the three months ahead improved to 23, returning to their level of March.