MNI: 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

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