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Free AccessMNI: UK Aug Manufacturing PMI At 25-Month Low: IHS Markit
--UK Aug Manufacturing PMI 52.8 Vs 53.8 in July
By Jai Lakhani
LONDON (MNI) - UK manufacturing sector activity growth was significantly
slower in August, the latest IHS Markit/CIPS Purchasing Managers' Index (PMI)
showed.
The headline manufacturing PMI dropped to a 25-month low of 52.8 in August,
down from a revised reading of 53.8 in July (initially 54.0). The move shows a
significant softening in the manufacturing sector, with a dip in business
optimism to a 22-month low boding poorly for the outlook.
According to the details of the release, both output and new orders grew at
a weaker pace in August. The latter expanded at the slowest pace in 25 months,
pulled lower by the first contraction in new export orders since April 2016.
--EXPORT WEAKNESS
New export orders contracted despite sterling's continued relative
weakness. Some firms attributed the decline to softer global economic activity.
There were also reports of slower growth of new work from the domestic
market. Coupled with weak export demand, this landed a blow to business
confidence and labour market developments. The pace of job-creation almost
stagnated and business optimism dipped to a 22-month low (albeit remaining in
positive territory). Notably, Brexit-related uncertainty was reported by some
respondents to be driving business confidence lower.
--INPUT COSTS ELEVATED
Inflationary pressures remained elevated in August, as both output charges
and input costs rose above their survey average rates. Higher costs for metals,
electronic components, energy and a range of other inputs were passed on via
higher selling prices. Raw material shortages and supply-chain constraints
contributed to higher input price pressures.
"The performance of the UK manufacturing sector looked increasingly
lacklustre in August... Based on its historical relationship with official ONS
data, the latest PMI report is broadly consistent with zero growth in
manufacturing production, meaning the sector will likely fail to provide any
support to the wider UK economy in the third quarter," Rob Dobson, Director at
IHS Markit, said.
Duncan Brock, Group Director at the Chartered Institute of Procurement &
Supply added: "Fears for a stalling manufacturing sector took a step closer to
becoming a reality this month with the most disappointing performance for two
years... With a subdued global economy threatened by escalating trade wars and
Brexit uncertainty making its mark, it's unclear where future opportunities to
sustain the health of the sector will come from."
--MNI London Bureau; +44 203 865 3828; email: jai.lakhani@marketnews.com
--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com
[TOPICS: MABDS$,M$B$$$,M$E$$$,MT$$$$]
To read the full story
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Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.