Sluggish export orders prove a drag on factory output as growth slows

The CBI Industrial Trends survey said the strong pound and eurozone uncertainty helped drag down total output volumes to a balance of plus four, from plus ten in the last quarter, the lowest level since January 2013.

Overall, total orders in the period moved from a balance of zero to plus one, lifted by domestic orders which rose modestly. However, economists had forecast a bigger rise.

During the period, export orders posted a balance of plus four, unchanged from three months ago.

The survey added that prices paid for export goods came in at a balance of minus ten, the weakest since October 2012.

CBI deputy director-general Katja Hall said: “Exports keep dragging at the heels of growth –firms are finding the recent rise in the pound against the euro challenging, making them less competitive in Europe, while the unravelling situation in Greece is creating uncertainty.”

She added: “Among the measures business wants in the first 100 days of a new government, an ambitious, long-term export strategy must be a central element to keep growth on course.”

Capital Economics UK economist Paul Hollingsworth said the latest factory figures remained comfortably above their long-term averages. He added: “With domestic demand set to continue to grow at a robust pace, the manufacturing recovery should regain its vigour later this year.”