British factory order books improved again this month to their best showing in three years as the recovery in manufacturing gathered pace, a survey showed today.
The Confederation of British Industry's monthly industrial trends survey showed 30 per cent of firms said orders were below normal in February compared with 15 per cent which said they were above. That gave a balance of -15, up from -18 in January and the strongest since January 2001.
The CBI said that in spite of the sharp rise in the pound recently, exports orders were broadly similar to that in the last three months and much better than through most of 2003.
"The US-led recovery in global demand is clearly benefiting UK manufacturers," said Mr Doug Godden, CBI head of economic analysis. "The weak dollar remains a threat to UK industry, but, at least so far, its effects are being outweighed by improving market conditions overseas."
The output expectations balance, however, fell from January's five-year high of +21 to +14, although this was still much better than levels seen in 2003.
The CBI also revised up its forecast for economic growth this year to 3.0 per cent from the 2.8 per cent it had predicted in November. Growth in 2005 is now expected to come in at 2.8 per cent, a tenth of a percentage point up from the previous forecast.
It predicted that interest rates will rise from their current 4.0 to 4.5 per cent by the end of the year.
"The economy should grow robustly this year and next as exports benefit from the gathering momentum in the global recovery," said Mr Ian McCafferty, CBI chief economist. "With employment continuing to rise, we see only a gradual slowdown in consumer spending despite the expected interest rate rises."