Factories struggle as slump lasts 8 months
FACTORY output fell at the fastest rate for nearly seven-and-a-half years in December amid a global slowdown and the boost from Brexit stockpiling fading.
A closely watched survey showed new work received declining for the eighth straight month, with demand drying up from overseas and domestic customers.
But firms were optimistic on prospects for the year ahead, based on new product launches and efficiency improvements as well as reduced uncertainty.
The IHS Markit/CIPS purchasing managers index for manufacturing, which generates about 10 per cent of output, stood at 47.5 last month. It has been below 50 points, denoting contraction, every month since May.
Duncan Brock, of the Chartered Institute of Procurement & Supply, said: “The pace of manufacturing’s decline in December will set alarm bells ringing as production levels sank at their fastest levels since July 2012 and with no sign of immediate recovery in sight.
“Though the result of the general election will bring some clarity to businesses, it still feels like a long road ahead for manufacturing to recover its losses from this year and there will still be some obstacles to overcome in 2020.”
One bright spot however was a pickup in the consumer sector.
Dave Atkinson, of Lloyds Bank Commercial Banking, said Brexit, signs of a US-China truce and international growth could lead to “an uptick in sentiment. Such progress should also release some pent-up investment delayed amid the uncertainty”.
● Brexit uncertainty among business leaders lifted after the general election, says a December Bank of England survey, but an increasing proportion – 42 per cent compared with 34 per cent in November – do not expect it to be resolved until at least 2021.