IHS Markit reports a six year low in UK manufacturing PMI
British manufacturing activity was hit by its sharpest fall since February 2013 as the IHS Markit fell from 49.4 in May to 48.0 in June.
The fall was below the average predicted by a Reuters poll of economists and comes amid prolonged Brexit uncertainty and volatility in the global trade environment.
PMI numbers have been known to be overly pessimistic in the past compared to official records, but IHS Markit economist Rob Dobson does not believe they are an anomaly and stated that a slowing of the manufacturing market in Britain is very much underway.
Dobson pointed the finger at Brexit-related stockpiling as one cause of the slowdown.
Dobson said: “The downturn in UK manufacturing deepened during June as the impact of firms unwinding stockpiles built before the original Brexit date continued to reverberate through the sector and exacerbate weak demand”.
The ongoing trade war between the US and China saw export demand down for a third successive month and the British Chambers of Commerce have announced the worst outlook for domestic manufacturing orders in seven years.
Meanwhile, the Confederation for British Industry revealed on Sunday that private sector activity fell in the period of April-June 2019 by levels unseen since 2012.
Official data towards the end of June saw Britain’s economy grow by 0.5 per cent in the first quarter, with growth coming from stockpiling activity within the sector in the run-up to the initial Brexit deadline of March 29.
The boost from stockpiling has now reversed and comes in tandem with Brexit-related stoppages in the automotive industry which have taken their toll on the sector.
Monday’s PMI data, logged between June 12 and June 25, showed little sign of respite to come in the next two months, with new orders down by the biggest margin since July 2012.
Britain is now set to leave the EU on October 31 and manufacturers appear to be bracing themselves for disruption at European ports and the UK border in case of a no-deal scenario.
Dobson added: “Businesses were cutting back on both day-to-day and capital spending in increasing numbers. Consumer goods were the only area of manufacturing to gain in June”.