UK manufacturing PMI falls to lowest level since July 2012

UK manufacturing during August was heavily hit by high levels of widespread economic and political uncertainty, new data on Monday revealed.

The GBP/USD is trading below 1.2100 as Brexit uncertainty prevails.

The IHS Markit/CIPS Purchasing Managers’ Index (PMI) was at 47.4 in August, down from 48.0 recorded in July and falling to the lowest level since July 2012.

According to the research, the level of new export business shrank at the fastest rate in over seven years during the period. Manufacturers have cited global trade tensions, slower world economic growth and Brexit uncertainty as factors contributing to the reduced demand.

Additionally, it was reported that some EU-based clients were routing supply chains away from the UK as a result of Brexit.

A low level of business optimism was also recorded, connected to the weakening market conditions, signs of a global economic slowdown, Brexit uncertainty and subdued client confidence.

“High levels of economic and political uncertainty alongside ongoing global trade tensions stifled the performance of UK manufacturers in August,” Rob Dobson, Director at IHS Markit, which compiles the survey, commented on the data.

“Business conditions deteriorated to the greatest extent in seven years, as companies scaled back production in response to the steepest drop in new order intakes since mid 2012,” Rob Dobson continued.

“Demand from domestic and export markets both weakened in August, with new export business suffering the sharpest fall in seven years. The global economic slowdown was the main factor weighing on new work received from Europe, the USA and Asia.”

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, also provided a comment:

“Soured by the continuing intensely difficult conditions, the sector resorted to some job shedding and increased their own prices as a last-ditch effort against renewed pressure from a weakening pound.”

“As Brexit planning intensifies, some firms were resorting to more inventory building whilst others were unravelling their stocks. With some supplies impacted by port delays and poor supplier performance, a creeping dread is descending on the sector that there will be more of these obstacles to come.”

Just last week, Boris Johnson asked the Queen to suspend parliament, preventing MPs from blocking a no-deal departure ahead of the extended Brexit deadline.

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