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July manufacturing output fell after Brexit vote July manufacturing output fell after Brexit vote
(35 minutes later)
Manufacturing output slumped in July at its fastest pace in a year as factories restricted production in the immediate aftermath of the Brexit vote.Manufacturing output slumped in July at its fastest pace in a year as factories restricted production in the immediate aftermath of the Brexit vote.
The car industry was among just a handful of sectors to expand, while textiles and metal production fell and pharmaceutical manufacturing dived.The car industry was among just a handful of sectors to expand, while textiles and metal production fell and pharmaceutical manufacturing dived.
A broader measure of industrial production inched higher, but only after a long recession in the quarrying and mining sector came to an end and the low value of the pound sent oil exports higher.A broader measure of industrial production inched higher, but only after a long recession in the quarrying and mining sector came to an end and the low value of the pound sent oil exports higher.
The Office for National Statistics data confirmed a range of industry surveys that showed the shock result of the referendum poll hit manufacturers hard. The Office for National Statistics data confirmed a range of industry surveys showing that manufacturers had been hit hard by the EU vote .
A turnaround in manufacturing output was recorded by the Markit/Cips UK manufacturing PMI, which rose to 53.3 in August from 48.3 in July, where a figure below 50 indicates contraction. But a turnaround in manufacturing output was recorded by the Markit/Cips UK manufacturing PMI, which rose to 53.3 in August from 48.3 in July, where a figure below 50 indicates contraction.
That was the joint greatest month-to-month jump in the survey’s nearly 25-year history, and was leapt on by Brexit campaigners who said it showed the fears surrounding the no vote were misplaced. That was the joint largest month-to-month jump in the survey’s nearly 25-year history, and was leapt on by Brexit campaigners who said it showed the fears surrounding the no vote were misplaced.
The ONS said manufacturing was the only sector to contract from the previous month, falling by 0.9% with the largest contribution from pharmaceuticals.The ONS said manufacturing was the only sector to contract from the previous month, falling by 0.9% with the largest contribution from pharmaceuticals.
“However, this was offset by growth in the other three sectors, particularly mining and quarrying, which increased by 4.7%,” it said.“However, this was offset by growth in the other three sectors, particularly mining and quarrying, which increased by 4.7%,” it said.
But the size of the fall in manufacturing restricted growth in the production sector, which includes agriculture, electricity supply and paper production, to just 0.1% month on month.But the size of the fall in manufacturing restricted growth in the production sector, which includes agriculture, electricity supply and paper production, to just 0.1% month on month.
In the three months to July 2016, total production and manufacturing output increased by 1.0% and 0.5% respectively on the previous three months.In the three months to July 2016, total production and manufacturing output increased by 1.0% and 0.5% respectively on the previous three months.
Chris Williamson, chief economist at financial data provider Markit, said: “The data confirm indications from business surveys that the vote to leave the EU on 23rd June had an immediate damaging impact on the economy.Chris Williamson, chief economist at financial data provider Markit, said: “The data confirm indications from business surveys that the vote to leave the EU on 23rd June had an immediate damaging impact on the economy.
“However, while PMI data had also indicated a sharp fall in factory output in July, the surveys have since shown a strong rebound in August as the initial shock of the EU referendum passed. The overall picture is one of fairly flat manufacturing output so far in the third quarter, and a broadly stagnant economy as a whole.”“However, while PMI data had also indicated a sharp fall in factory output in July, the surveys have since shown a strong rebound in August as the initial shock of the EU referendum passed. The overall picture is one of fairly flat manufacturing output so far in the third quarter, and a broadly stagnant economy as a whole.”
Suren Thiru, head of economics at the British Chambers of Commerce, said a sterling-induced bounceback in August should not disguise long-term structural issues facing the industry.
He said: “The continued failure to address some of these deep-rooted issues has left the sector increasingly exposed to economic uncertainty at home and challenging global conditions.
“The priority for the upcoming autumn statement must be to boost business confidence by addressing the UK’s creaking infrastructure and supporting businesses to invest, hire and grow,” he added.
Martin Beck, senior economic advisor to the EY Item Club, was more optimistic about the outlook, arguing that the fall in sterling would help the manufacturing sector become more competitive and “show signs of recovery around the turn of the year”.