Strong pound to weigh on UK manufacturing output?

Even though momentum in the UK economy remains strong, the manufacturing sector is struggling to benefit from this. Output fell by 0.4% mom in April and then by a further 0.6% in May. Exports might be getting hurt by the strength of the pound.

"The business surveys are showing that export orders have weakened of late so this explanation seems highly plausible. If it is correct then further weakness should be expected in the months ahead as the pound has continued to appreciate", says Societe Generale.

The recent surprise fall in the trade in goods deficit should not be completely trusted. This was primarily the result of a fall in imports, which looks like an aberration, rather than by a rise in exports.