Orders for British manufacturing exports hit a two-year peak in August following a Brexit-induced fall in sterling, as the weaker pound also pushed up price expectations to their highest in over a year, a survey showed on Tuesday.
The Confederation of British Industry said its measure of overall factory orders dipped slightly in August to -5. But that beat a median forecast of -9 in a Reuters poll of economists, and export orders improved to -6 from -22, their highest since August 2014.
Manufacturers were more optimistic as output expectations for the next three months rose to +11 from +6 in July.
Supporters of Britain’s departure from the European Union have argued that a post-referendum decline in sterling was likely to help the economy, while opponents say the outcome of the June 23 vote could tip the country into recession.
Economists cautioned against reading too much into the CBI survey.
Samuel Tombs, at Pantheon Macroeconomics, said export orders had jumped in August in the past two years only to fall back in September, and the overall reading from manufacturing was consistent with stagnation in output.
Allan Monks at JP Morgan said the survey suggested the economy was set for a sharp slowdown but not a recession.
Anna Leach, CBI Head of Economic Analysis and Surveys, said stronger-than-expected manufacturing output growth and some signs that the fall in sterling was helping to bolster export orders were positives.
“But the pound’s weakness is a double-edged sword, as it benefits exporters but also pushes up costs and prices,” she said.
The CBI said average prices that manufacturers expected to charge over the next three months rose to +8 in August from +5 in July, their highest since February 2015.
The survey reinforced recent data showing inflation gathering pace after Brexit, highlighting the challenge the Bank of England might face in trying to stimulate the economy while price pressures pick up.
Separate data on Tuesday added to signs that consumers have shrugged off the outcome of the referendum, at least for now.
Grocery sales in Britain saw their fastest rise since March, according to industry data, while British housebuilder Persimmon said it had seen a jump in reservations by buyers of new homes over the last two months. [IDnL8N1B40PH]
Data published last week showed retail sales jumped in July.
However, Brexit is expected to hurt consumer spending over time as the economy slows, inflation picks up and uncertainty over Britain’s relationship with the EU weighs on investment and hiring decisions.