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Export concerns cloud over manufacturing optimism

Britain's manufacturing sector is performing well despite the strong performance of the pound overseas, a survey shows.Research from manufacturing firm EEF showed that output remains robust and firms are positive on employment and investment in the second quarter.Job cuts are expected to slow in the next three months while investment intentions and output orders remain buoyant.But in a sector which has recently developed a strong reliance on exports for its prosperity, the strong pound is beginning to make their impact felt. Expectations for export orders fell from plus 22 per cent to plus nine per cent, according to the survey.Interest rate rises are also expected to have a negative impact. The Bank of England announces its June decision on Thursday, with some predicting another hike after last month's raise to 5.25 per cent.EEF chief economist Steve Radley said: "Business accepts that higher interest rates can be a pay price worth paying to maintain economic stability and keep inflation low. It also understands the Bank's concern over increasing numbers of companies intending to raise prices."However, with wages and factory gate prices rising modestly, there is no need for an immediate rate rise, although the case for an increase may build further out."

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