Export orders from UK manufacturers were higher than normal in May, the first time that demand from abroad has been above par in more than two years, according to a closely watched survey.

The CBI’s monthly industrial trends survey found that 3 per cent more manufacturers described their export orders as “above normal” than below normal, the first time this has happened since March 2008 as the UK recession began to bite.

The weak pound has made UK exports more attractive, and manufacturers are benefiting from the pick-up in world trade,” said Ian McCafferty, the CBI’s chief economic adviser. He noted that employers also were expecting a stronger rise in overall production in the coming months.

The upbeat picture on exports from the nation’s manufacturers is in stark contrast to the latest UK trade figures which showed that Britain’s deficit in goods and services widened by more than £1bn at the end of the quarter ended March 31 from where it had been at the end of 2009.

UK policy-makers had been counting on rising exports to offset the expected weak demand at home as government and households pare back borrowing and consumption.

The CBI noted that domestic demand does appear to be softening. A balance of 18 per cent more manufacturers reported orders below normal rather than above it. However, this is still a better picture than that seen in April when the survey found that 36 per cent more manufacturers had sub-normal order levels.

The CBI industrial trends survey found more manufacturers expected output to rise rather than fall – 17 per cent more said output was rising rather than falling, up from a balance of 14 per cent in April – but that price pressures remained.

The CBI said that inflationary pressures remained significant and domestic prices were expected to rise over the next three months, with a balance of 14 per cent expecting these to rise.

Mr McCafferty said this reflected rising energy costs as well as the effects of rising import prices.

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