UK manufacturing output for June was languishing at a level only slightly higher than was reached in October last year. This is strange, given the evident momentum of domestic economic activity.
This is attributed to a surprising sensitivity to the strength of the pound, because the traded goods sector seemed to respond only slowly and weakly to the massive depreciation of the pound experienced in 2008 and 2009. Whatever the reason, there is evidence from both the CBI and PMI surveys that export orders are being hit.
According to Societe Generale, "This latest CBI survey is expected to reiterate that message with export orders staying close to the -17 recorded in both June and July. Output expectations should also struggle to improve on the weak reading of 15 seen in July."
