Factory blues as manufacturing output hits lowest level in over two years

0 Andy Hall: ‘underwhelming’ set of manufacturing data Output from the UK’S manufacturing sector touched its lowest level in more than two years last month following a slump in demand from overseas.

The closely watched Markit/ Cips manufacturing purchasing managers’ index (PMI) showed a reading of 52.8 for August, down from 53.8 in July and shy of economists’ expectations of 54. Any reading above 50 denotes growth.

Thefiguremarksa25-month low and comes alongside job creation slowing to “nearstagnation” in the sector, and business optimism tumbling to a 22-month low.

Rob Dobson, director at IHS Markit, which compiles the survey, said: “The performance of the UK manufacturing sector looked increasingly lacklustre in August.

“The headline PMI fell to its lowest level for over two years, as growth of output and new orders slowed and the pace of job creation slumped to near stagnation.”

Andy Hall, head of corporate banking, central Scotland at Barclays, said: “With such an underwhelming set of data, the only positive to pull out is that the index still remains in positive territory.

“The improving performance we‘ve seen in exports over the past two years, boosted by the weakness in sterling, took a worrying hit last month.

“Political and economic uncertainty is clearly impacting manufacturers investment intentions but one thing that is certain is in order to increase exports and drive growth, what manufacturers need to see sooner rather than later is a Brexit transition deal to avoid the risk of prolonging a more cautious and tentative approach to investment from the sector.”

The main cause behind the fall in manufacturing output levels was foreign demand decreasing for the first time since April 2016.