Brexit un­cer­tainty still felt in man­u­fac­tur­ing

Belfast Telegraph - Business Telegraph - - Nijobfinder - BY MARYAM COCKAR

THE man­u­fac­tur­ing sec­tor is un­likely to make any con­tri­bu­tion to GDP in the fi­nal quar­ter as global trade ten­sions and Brexit un­cer­tainty con­tinue to weigh on busi­nesses.

Fig­ures from the IHS Markit/ CIPS UK Man­u­fac­tur­ing pur­chas­ing man­agers’ in­dex (PMI) showed a read­ing of 53.1 last month, higher than the 51.1 in Oc­to­ber.

A fig­ure above 50 in­di­cates growth and the Novem­ber PMI beat econ­o­mists’ ex­pec­ta­tions of a 51.6 read­ing. How­ever, growth was among the low­est recorded over the past two and a half years.

The sur­vey showed that the growth in new or­ders came pri­mar­ily from the UK do­mes­tic mar­ket with new prod­uct launches and com­pa­nies stock­pil­ing ahead of Bri­tain’s de­par­ture from the Euro­pean Union.

But or­ders from over­seas dropped for the sec­ond con­sec- utive month in Novem­ber, which IHS said was the first back-to-back con­trac­tion since early 2016 as Brexit un­cer­tainty took a toll on com­pa­nies.

Rob Dob­son, di­rec­tor at IHS Markit, which com­piles the sur­vey, said: “The Novem­ber PMI pro­vided a lack­lus­tre pic­ture of the UK man­u­fac­tur­ing sec­tor, as on­go­ing global trade ten­sions and Brexit un­cer­tainty weighed on cur­rent busi­ness con­di­tions and damp­ened the out­look for the year ahead.”

He said the sur­vey sug­gests man­u­fac­tur­ing out­put is on course to make “no con­tri­bu­tion to GDP growth in the fi­nal quar­ter, with a clear risk of out­put con­tract­ing un­less De­cem­ber proves a stronger month”.

“While de­mand from the do­mes­tic mar­ket was a pos­i­tive spur, in some cases as clients built up their stocks in re­sponse to Brexit and other sup­ply chain un­cer­tain­ties, man­u­fac­tur­ers also re­ported a fur­ther de­crease in new ex­port busi­ness with slow- er global eco­nomic growth and Brexit wor­ries tak­ing a bite out of for­eign de­mand.

“Brexit wor­ries also in­creas­ingly dom­i­nated the out­look for the sec­tor. Although still fore­cast­ing growth for the year ahead, man­u­fac­tur­ers’ con­fi­dence fell to its low­est ebb since Au­gust 2016.”

Sa­muel Tombs, chief UK econ­o­mist at Pan­theon Macroe­co­nomics, said, with over­seas de­mand frag­ile, the man­u­fac­tur­ing sec­tor “does not have a buf­fer to with­stand any lurch down in the do­mes­tic econ­omy caused ei­ther by a no-deal Brexit or in­ten­si­fy­ing fears that this worst case might hap­pen”.

The busi­ness com­mu­nity in North­ern Ire­land has thrown its weight be­hind the cur­rent EU deal pro­posed by Theresa May in or­der to avoid ‘crash­ing out’ on March 29 next year.

How­ever, the back­stop pro­vi­sion within the agree­ment, to avoid a hard bor­der on the is­land of Ire­land, has left the main union­ist par­ties strongly op­posed.

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