UK July factory orders fall sharply: CBI

LONDON - British factory orders unexpectedly fell in July at their sharpest rate since the start of the year as exports took a knock, a survey showed on Tuesday.

By (Reuters)

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Published: Tue 24 Jul 2007, 8:04 PM

Last updated: Sat 4 Apr 2015, 10:22 PM

The Confederation of British Industry said its monthly manufacturing order books balance fell to -6 from +8 in June. Analysts had expected a reading of +6.

Firms were also less confident about putting up prices, something which may give succour to Bank of England policymakers worried about inflation. The price expectations balance fell to +11 from +16 in June, the lowest reading since December.

Sterling fell and gilts rose on the figures which suggesting interest rates may not need to rise as high as markets had expected.

“The sharp drop in the CBI industrial trends survey underlines that the Bank of England cannot keep hoisting rates with impunity,” said David Brown, economist at Bear Stearns.

Manufacturing companies are also expecting to raise output at the slowest rate since November with the balance facing to +10 in July from +25 in the month before.

And there were signs that the pound’s rise to 26-year peaks against the dollar, and a range of other factors, may be denting exporters’ prospects with their order books balance falling to -8 from 0.

“UK exports had been resolute in the face of a strong pound for a number of months but a combination of a slower U.S. economy and sharp increases in the price of oil, commodities and freight is beginning to tell for exporters,” said Ian McCafferty, chief economic adviser.

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