LONDON (REUTERS) - British manufacturers saw their order books grow at the strongest pace in two years this month, but the post-Brexit vote fall in the value of the pound is pushing up their prices sharply, an industry survey showed.
The Confederation for British Industry's survey, published on Monday, underscored how the decision to leave the European Union has so failed to hurt the country's economy - although an inflation challenge is growing quickly.
The CBI said its total order book balance improved to +8 from +5 in January, well above its long-run average of -15 and better than a median forecast in a Reuters poll of economists for a fall to +3.
"Stronger demand and production is good news for UK manufacturers, though the weaker pound continues to push up input costs," CBI chief economist Rain Newton-Smith said. "This is now feeding through to output price inflation expectations."
Export orders, which have been helped by the fall in the value of the pound, were roughly stable at -10, better than their long-standing average.
But a measure of how manufacturers expect to change their prices over the next three months rose further to hit its highest level since April 2011, the CBI said.
Britain's consumers, rather than its manufacturers, were responsible for the stronger-than-expected reaction of the country's economy last year to the Brexit vote.
However, data published on Friday showed shoppers reined in their spending in January as prices rose following the fall in the value of the pound since the June referendum decision to leave the European Union.