Brexit’s delay hits factories

BRITAIN’S factories suffered their worst month since just after the EU referendum in 2016 as trade war tensions and Brexit uncertainty begin to bite.

New orders and employment fell for the first time in 27 months as further evidence emerged that the export boost from a weaker pound which powered manufacturing last year is running out of steam.

Weak demand in the car industry applied some of the brake as new EU emissions tests created a supply backlog. But even when this unwinds, economists talked down prospects for a bounceback in the short term for manufacturing, which generates 10 per cent of UK output.

October’s IHS Markit/CIPS purchasing managers’ index fell to 51.1 from 53.6 the previous month – a reading above 50 means growth – with companies seeing less new work from overseas and home demand.

Jobs increased at small and medium-sized firms, but fell for a third straight month at large manufacturers. IHS Markit director Rob Dobson said demand was hit by “a combination of Brexit uncertainties, rising global trade tensions and especially weak demand for autos”.

CIPS director Duncan Brock added: “Alarm bells were ringing in the sector. To see inflows of new orders decline will send shivers down the spine of business.”

Pantheon Macroeconomics chief UK economist Samuel Tombs added: “Manufacturers are at the sharp end of the slowdown in global trade and the increasing reluctance of European customers to source components for Britain, given the risk that supply chains might fail in the event of a no-deal Brexit.

“The silver lining is that the pressure on the Government to make all of the compromises required to obtain a Withdrawal Agreement and to opt for a soft Brexit will only grow as the pain from Brexit spills over from corporates to consumers.”