Brexit fears in manufacturing grow

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Britain’s factories suffered a sixth consecutive month of slumping orders in October, as Brexit, combined with economic and political uncertainty, weighed on manufacturer supply chains. 

According to IHS Markit/ CIPS monthly purchasing managers index there was weak global demand for British-manufactured goods last month.

It said that firms had reported that weaker inflows of new business, especially from the domestic market, had led to a further scaling back of output. However, the speed at which productivity declined, slowed for a second month because manufacturers have stockpiled in anticipation for the possibility of the UK leaving the EU without a deal.

Rob Dobson, director at IHS Markit, which compiles the survey, said: “The manufacturing downturn continued at the start of the final quarter as uncertainties surrounding Brexit, the economic outlook and domestic politics all took their toll.

“However, the underlying picture looks even darker than even these disappointing headline numbers suggest, as output and new orders fell despite short-term boosts from stock-building activity in advance of the October 31st Brexit deadline, which included a rise in exports as clients in the EU sought to mitigate supply risk.

“With a further Brexit extension confirmed and the prospect of a December general election, it looks as if the spectre of uncertainty will cast its shadow over manufacturing for the remainder of 2019.”

The IHS Markit purchasing managers’ index increased to 49.6 in October, from 48.3 in September, where a number below 50 signals contraction.

Seamus Nevin, chief economist at Make UK, said: “Global markets have been having a rough time recently and, in that context, today’s disappointing news of further falls in output, new orders – especially from UK based customers – and more job losses should not be a surprise.

“Job cuts have happened for the seventh consecutive month with the rate of decline among the sharpest in a decade.

“Many manufacturers had some form of shutdown planned, while others were engaged in expensive stock building activities in preparation for potential no deal shocks to their supply chain. This together with the continued Brexit and now electoral uncertainty means there is no end in sight to the roadblocks industry is facing.”

By Michelle Mooney

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