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Export order books improve

Demand for British-made goods rose in June but this could be threatened by the rise in the pound, the CBI has warned.

The business group's Industrial Trends survey showed manufacturing orders were at their strongest since December's 18-year high, with the food and drink sector "particularly robust".

Export order books rose to a level well above the long-run average, driven by strong results from the mechanical engineering, electronics and motor vehicle industries, the CBI said.

Deputy director-general Katja Hall said: "Demand for British made goods remains buoyant and that's helped drive this quarter's further rise in output.

"Growth is broad-based, with the recovery spreading its roots, and firms have high hopes for the coming quarter.

"However, the recent rise in sterling could impact on the resilient export orders we've seen lately.

"As a result, now is the right time to capitalise on boosting manufacturing further by taking action to strengthen the UK's supply chains across industry.

"This will help unlock further growth and increase exports."

The poll of 514 firms found output volumes rising at a solid pace.

It showed 39% of firms reporting output over the last three months was up and 22% said it was down, giving a balance of plus 17%, an advance on May's 15% and the best reading since February.

Expectations for output in the coming quarter were steady at plus 32%.

Meanwhile, the balance of firms reporting order books above normal was plus 11%, the best since last December's 12%.

Export order books gave a balance of minus 2% but this was well above the long-run average and the best since February.

Howard Archer, chief UK and European economist at IHS Global Insight, said it added to evidence that the sector maintained a strong performance through the second quarter and was well-placed for more expansion in the third.

He added: "The prospects currently look largely encouraging for manufacturers.

"Ongoing healthy UK economic activity and robust business confidence should boost investment plans and hence lift demand for capital goods.

"Meanwhile, improving global growth should help UK manufacturers' export orders as 2014 progresses, although the upside for export orders may very well be constrained by domestic demand in the eurozone improving only gradually.

"Furthermore, the strength of the pound could become an increasing problem for UK manufacturers."

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