UK Manufacturing Downturn Deepens

The UK’s manufacturing sector continued to feel the impact of the unwinding of pre-Brexit stockpiling activity during June, as already high stock levels led to a scaling back of output and new order intakes, with demand from both domestic and export markets weakening. The pound weakened 0.4% against the dollar to $1.2641, close to the lowest level seen during the first half. At 48.0 in June, down from 49.4 in May, the headline seasonally adjusted IHS Markit/CIPS Purchasing Managers’

Index fell for the third consecutive month to its lowest level since February 2013, according to a report early on Monday. The index has posted below the no-change 50.0 threshold for two months in a row, the first back-to-back declines since early-2013.

The report said manufacturing production contracted at the fastest pace since October 2012, as output was lowered in response to reduced intakes of new business, which fell to the greatest extent for almost seven years.

Demand from domestic and foreign markets weakened during June, according to the report. New export orders declined at a rate close to May’s four-and-a-half year high. Softer global economic growth and continued Brexit uncertainty were the main factors underlying the latest declines.

“The downturn in UK manufacturing deepened during June, as the impact of firms unwinding stockpiles built before the original Brexit date [March 29] continued to reverberate through the sector and exacerbate weak demand,” Rob Dobson, director at IHS Markit, said. “This led to solid decreases in both production and new orders, which sank the headline PMI to its lowest in almost six-and-a-half years.”

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