Brexit weighing on manufacturing

Output from Britain’s manufacturing industry has slumped to its lowest level in more than three years.

The latest Markit/CIPS UK Manufacturing purchasing managers’ index (PMI) fell to levels last seen in February 2013 as it hit 48.2 in July, down from 52.4 in June and below expectations. A reading above 50 indicates growth. The result will heap further pressure on the Bank of England to hand the UK economy a fresh dose of monetary stimulus when it votes on interest rates this Thursday.

The survey showed the sector had slipped since a flash UK manufacturing PMI published towards the end of last month when it fell to a 41-month low.

It also found the rate of job losses across the sector was its secondsharpest for almost 3½ years.

Rob Dobson, senior economist at Markit, said the downturn was industrywide with output scaled back across firms of all sizes.

“The pace of contraction was the fastest since early 2013 amid increasingly widespread reports that business activity has been adversely affected by the EU referendum,” Mr Dobson said.

“The drops in output, new orders and employment were all steeper than flash estimates.”

While the slump in the value of the pound post-referendum did help UK exports, the survey found the boost was “less marked than previously estimated”.

David Noble, group chief executive at CIPS, said: “After seven months of modest drops, employment figures showed an entrenchment in uncertainty with a sudden deterioration – the second sharpest drop in almost 3½ years, as businesses chose redundancy and restructuring to secure themselves against more possible bad news ahead.”

He added: “Without new orders coming through, this downward trajectory is likely to get worse, at least in the short term.”

Picture: Getty. Manufacturing output in the UK has fallen.