UK factories saw exports orders in March plunge to their lowest level for more than two years, impacted by a strong pound and eurozone uncertainty, figures showed today.
The pound plunged against the US dollar and the euro after the manufacturing data was released by the CBI.
A poll of 468 firms found total order books fell more steeply than expected from February's six-month high.
On exports, just 10% said orders were above normal, with 35% saying they were below, giving a rounded average of minus 26%, the lowest level since January 2013.
However, the report said factory output had been growing at a decent pace since August, and despite easing from last month, remained above the long-term average of minus 16%.
The survey also pointed out that firms expect to ramp up production over the next three months.
CBI director of economics Rain Newton-Smith said: "Our manufacturers lost some of their steam from last month, but they continue to move steadily along a decent growth track.
"Sluggish export performance seems to be a headache that won't go away, with a still subdued eurozone and headwinds from a stronger pound. But measures in the Budget to support exporters should be a welcome boost for the sector's longer-term prospects."
The pound has risen by 7% since the start of the year against the euro. Minutes from the Bank of England's March policy meeting showed rate setters were concerned that sterling strength might prolong ultra-low levels of inflation, due to imports being cheaper.
Meanwhile eurozone uncertainty has been fuelled by attempts by Greece's prime minister Alexis Tsipras to ease his country's austerity measures.
Capital Economics UK economist Paul Hollingsworth said: "Looking ahead, it is clear that exporters will struggle to make headways given sterling's appreciation and the weakness of demand in the eurozone.
"But with lower oil prices set to continue to provide a boost to manufacturers through lowering their input costs, and the domestic recovery to maintain a robust pace, we still expect growth in manufacturing output to regain some momentum over the coming quarters."
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