LONDON--Orders in the U.K. manufacturing industry hit a two-year high in February, an industry survey showed Monday, as the pound's post-Brexit vote weakness continued to drive overseas demand.
But British manufacturers expect to sharply raise their selling prices over the next three months, the data also showed, as the weakened currency pushes up their input costs.
The Confederation of British Industry, an employers' lobby group, said its monthly survey of sentiment in the manufacturing sector showed that the total orders balance stood at plus 8 in February, the highest reading since February 2015.
The reading reflects the percentage of businesses reporting an increase in orders versus those experiencing a decline. Economists polled by The Wall Street Journal expected the balance to fall slightly, to plus 2, from plus 5 the previous month.
However, selling price expectations for the next quarter rose to plus 32, the highest reading since April 2011, from plus 28 the previous month.
Economists warn that as higher input prices begin to translate into accelerating consumer inflation, British shoppers may rein in their spending, hurting the U.K.'s growth prospects.
Official data suggest that the Brexit-related squeeze on consumer spending is already under way: Retail sales shrank for the third consecutive month in January as consumer price inflation hit a more than two-year high of 1.8%.