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Brexit possibility impacts on British manufacturing sector Brexit possibility affects British manufacturing sector
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Uncertainty over Britain’s membership of the EU is hitting a third of businesses in the UK manufacturing sector, which barely scraped growth in May according to a closely watched survey.Uncertainty over Britain’s membership of the EU is hitting a third of businesses in the UK manufacturing sector, which barely scraped growth in May according to a closely watched survey.
Foreign demand for goods from British factories fell for a fifth month as firms reported that customers were unwilling to commit to investment ahead of the 23 June referendum.Foreign demand for goods from British factories fell for a fifth month as firms reported that customers were unwilling to commit to investment ahead of the 23 June referendum.
Related: Brexit 'would leave British workers £38 a week worse off'Related: Brexit 'would leave British workers £38 a week worse off'
Of the 427 businesses taking part in the Markit/CIPS survey, 27% said a potential Brexit was having a “detrimental” impact on business, while a further 8% said it was having a “strongly detrimental” impact. However, 50.8% said they expected it to have “no significant effect”. Of the 427 businesses taking part in the Markit/CIPS survey, 27% said a potential Brexit was having a detrimental impact on business, while a further 8% said it was having a strongly detrimental impact. However, 50.8% said they expected it to have no significant effect.
David Noble, chief executive at CIPS, said: “It is likely some manufacturers are maintaining a financial shield as a barrier against the uncertainties still affecting the sector, including those arising from the forthcoming EU referendum.”David Noble, chief executive at CIPS, said: “It is likely some manufacturers are maintaining a financial shield as a barrier against the uncertainties still affecting the sector, including those arising from the forthcoming EU referendum.”
The question on Brexit formed part of the monthly health check on the UK manufacturing sector, which showed activity at British factories grew by the smallest margin in May.The question on Brexit formed part of the monthly health check on the UK manufacturing sector, which showed activity at British factories grew by the smallest margin in May.
The headline index measuring activity on the Markit/CIPS PMI made it just above the 50 mark that separates growth from contraction, rising to 50.1 in May from 49.4 in April.The headline index measuring activity on the Markit/CIPS PMI made it just above the 50 mark that separates growth from contraction, rising to 50.1 in May from 49.4 in April.
It was slightly better than the 49.6 forecast by economists, but Rob Dobson, senior economist at Markit, said the survey showed manufacturing continued its “lacklustre start to 2016”. He said the PMI suggested manufacturing output, which accounts for about 10% of the economy, was on course for a 0.8% fall in the second quarter, following a 0.4% decline in the first. “The sector will therefore remain a drag on broader economic growth, adding pressure on the service sector to sustain the upturn in gross domestic product,” Dobson said. It was slightly better than the 49.6 forecast, but Rob Dobson, senior economist at Markit, said the survey showed manufacturing continued its “lacklustre start to 2016”. He said the PMI suggested manufacturing output, which accounts for about 10% of the economy, was on course for a 0.8% fall in the second quarter, following a 0.4% decline in the first.
James Smith, economist at ING, said uncertainty over the referendum would weigh on wider economic growth in the second quarter. He said: “We expect growth in the second quarter to slow to around 0.25% quarter-on-quarter, lower than the 0.4% recorded in the first quarter. It would be the slowest rate of GDP growth since the end of 2012.” “The sector will therefore remain a drag on broader economic growth, adding pressure on the service sector to sustain the upturn in gross domestic product,” Dobson said.
Campaigners in favour of staying in the EU have said the UK manufacturing sector will be badly hit if Britain votes to leave, partly because foreign companies will choose other countries over the UK to open new factories. James Smith, economist at ING, said: “We expect growth in the second quarter to slow to around 0.25% quarter-on-quarter, lower than the 0.4% recorded in the first quarter. It would be the slowest rate of GDP growth since the end of 2012.”
Campaigners in favour of staying in the EU said the UK manufacturing sector will be badly hit if Britain votes to leave, partly because foreign companies will choose other countries over the UK to open new factories.
The EU is Britain’s biggest trading partner and the TUC said highly skilled jobs would be lost because so much was exported from British factories to the EU.The EU is Britain’s biggest trading partner and the TUC said highly skilled jobs would be lost because so much was exported from British factories to the EU.
Frances O’Grady, the TUC’s general secretary, said: “What’s absolutely clear is that jobs would go. And not just any old jobs: we’d be losing high-pay, high-skill, high-productivity jobs. We’d lose manufacturing jobs that pay £100 a week more than service sector equivalents. These are good jobs in the regions outside of London that need them most. “Our manufacturing sector, still battered and bruised by the recession, would be hit hard. And inequalities between regions would get even wider. That’s why leading firms such as Airbus UK, BMW Mini and Ford have come out so strongly against Brexit.” Frances O’Grady, the TUC’s general secretary, said: “What’s absolutely clear is that jobs would go. And not just any old jobs: we’d be losing high-pay, high-skill, high-productivity jobs. We’d lose manufacturing jobs that pay £100 a week more than service sector equivalents. These are good jobs in the regions outside of London that need them most.
“Our manufacturing sector, still battered and bruised by the recession, would be hit hard. And inequalities between regions would get even wider. That’s why leading firms such as Airbus UK, BMW Mini and Ford have come out so strongly against Brexit.”
The May manufacturing PMI showed domestic demand for goods drove an increase in new orders. Jobs were cut in the sector for a fifth straight month, although the pace of losses slowed in May.The May manufacturing PMI showed domestic demand for goods drove an increase in new orders. Jobs were cut in the sector for a fifth straight month, although the pace of losses slowed in May.