A trio of economic reports has significantly dampened concerns that the Brexit vote has caused an immediate downturn in the UK economy (Brexit Advice).
- UK manufacturing export orders rose to a two-year high after the fall in the pound boosted demand for British goods. The CBI survey found that the order books of the country’s largest exporters had risen to their highest level since 2014, with 21 per cent of businesses reporting orders at above their normal levels.
- A quarter of employers plan to increase their workforce in the next three months, while only 3 per cent expect to reduce staff, according to the Recruitment and Employment Confederation.
- Activity in the eurozone economy rose to its highest level in seven months and shows no signs of being “derailed by Brexit uncertainty”, according to a flash purchasing managers’ index.
Martin Beck, of Oxford Economics, said that the surveys added to a consensus that the post-Brexit outlook was more positive than first feared.
“This idea the economy would see a big turnaround as soon as the vote happened was always overblown and the data is confirming that. The majority of voters consciously wanted this result. There was a certain amount of hysteria in the first week or so and now most economists are recognising that things aren’t as bad as they though at the time,” Mr Beck said.
The drop in sterling is also a likely cause for the increase in inflation last month from 0.5% to 0.6%. Arguably, with the government’s target for inflation still set at 2%, the increase should be received positively.
Unemployment numbers also fell last month with over 8,000 fewer claimants registered compared to the June figures.
Yields on government bonds have sunk to all-time lows since the vote while the Bank of England ran into trouble this month when a reverse auction of long-dated gilts failed to attract enough sellers. Yesterday the Bank was forced to pay a premium to complete an auction of 15-year bonds.
Although most economists are saying it is still too early to confidently predict the full economic effects of Brexit, the figures this week will certainly provide comfort to many.
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