British manufacturing firms reported increased export orders and sales in the first quarter of 2015 and an index recording the volume of trade export documents rose to its highest level on record, despite significant currency and economic headwinds, according to the latest quarterly report from DHL Express and the British Chambers of Commerce (BCC).
The survey, running since 2006, of more than 2,300 exporting firms revealed that 46% of manufacturers reported increased export orders in Q1, compared to 36% in Q4 2014. Accordingly, the export orders balance grew in Q1 2015 to +24% from +13% in the previous quarter. The lowest figure on record was -36% in Q1 2009.
In addition, 43% of manufacturing firms reported an increase in export sales, up from 38% in Q4 2014, leading the export sales balance to increase to +23% in the first quarter of 2015, up from +19% in the previous quarter. Meanwhile, the proportion of service firms that recorded increased export sales remained steady at 33%.
In a further measure of export strength, an index recording the volume of trade export documents issued rose to its highest level on record. Local Chambers of Commerce provide exporters with the documentation required to move their goods into international markets, and the volume of trade documentation index issued by the Accredited Chamber Network increased to 121.43 in Q1, compared to 117.43 in Q4 2014, and an increase of 3.8% on the same quarter in 2014.
Furthermore, almost half of exporting manufacturers surveyed (44%) increased their labour force in the first three months of 2015. The vast majority of these new jobs were full-time positions (84%), up from 61% in Q4 2014.
DHL and BCC observed that this level of growth had been achieved in the face of increasing pressure from higher exchange rates – in particular the rising pound against the euro, which reached a seven-year high in early March 2015. More than half of manufacturing firms surveyed (55%) said that exchange rates were having an impact on their ability to trade globally, compared to 48% in Q4 2014 and 34% at the same time last year.
BCC Director General, John Longworth said UK manufacturers were turning to export markets abroad to fuel their growth ambitions as relatively weak growth in the UK persisted. “Encouragingly, the increase in export sales and orders has come about in spite of the rise in the pound against the euro over recent months – a credit to the strength and expertise of the UK’s manufacturing sector,” Longworth said.
“Despite these positive figures, real progress towards eliminating the UK’s trade deficit remains elusive. At the heart of the new government’s agenda must be ambitious plans to improve the UK’s trade performance – we have to develop a pipeline of new exporters and help existing exporters break into new markets. Only then will the UK regain its position as a trading powerhouse and unlock future economic growth.”
The latest figures indicate that the UK economy grew by 0.3% in the first quarter of 2015, the slowest rate of growth since Q4 2012 and lower than the 0.6% recorded in the fourth quarter. In annual terms, the UK economy grew by 2.4% in Q1 2015 compared to 3.0% in Q4 2014.
Globally, the report noted that the US economy grew at an annualised rate of 0.2% over Q1 2015, down from growth of 2.2% in Q4 2014. China grew at an annual rate of 7.0% in the first three months of 2015, its slowest rate in six years.
However, Japan came out of recession in the fourth quarter of 2014 with the economy expanding by an annualised 1.5% in the last three months of 2014. This comes after the economy contracted for the two previous quarters. The report noted that the eurozone edged out of deflation in April after four months of falling prices, with the inflation rate in the eurozone rising to an estimated 0% in April, up from -0.1% in March.
Commenting on the figures and trends, Phil Couchman, CEO of DHL Express UK and Ireland, said: “The findings are very positive with confidence levels amongst UK exporters reaching a record high. Manufacturing is the hero this quarter; not only were manufacturing exporters particularly confident but a large proportion of businesses surveyed are also planning to hire new staff.
“With much discussion and analysis on how UK manufacturing is transforming, it is positive that UK manufacturers are considering overseas markets for growth. There is a global demand for high quality British products and we hope to see this continue so the sector can once again establish itself as a leader on the world stage.
“We are confident in the future of the UK export market and we know from our customers that businesses can reap the rewards through export success. To sustain growth, exporters, particularly SMEs, need to take advantage of the increasing tools and support available.”
