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Brexit latest: Manufacturing slows unexpectedly in November | Brexit latest: Manufacturing slows unexpectedly in November |
(about 7 hours later) | |
Manufacturing activity cooled in November according to the latest survey snapshot of the sector. | Manufacturing activity cooled in November according to the latest survey snapshot of the sector. |
The latest Purchasing Managers’ Index, produced by Markit/CIPS, showed a reading of 53.4 for last month. | |
This was still comfortably above the 50 point that signals expansion, but lower than October's 54.2 reading. | This was still comfortably above the 50 point that signals expansion, but lower than October's 54.2 reading. |
City of London analysts had expected it to strengthen to 54.5. | City of London analysts had expected it to strengthen to 54.5. |
The much-watched indicator plummeted into contraction territory immediately after the June referendum vote, contributing to fears of a recession, but then bounced back powerfully. | |
It has now slipped back for two successive months. | It has now slipped back for two successive months. |
There were also continued signs of growing manufacturing cost pressures due to the plunge in the UK exchange rate since the Brexit vote. | There were also continued signs of growing manufacturing cost pressures due to the plunge in the UK exchange rate since the Brexit vote. |
Markit reported that average purchase prices rose “at a pace close to October’s near six-year record again at one of the fastest rates in the survey history”. | |
It also reported “strong inflation of input costs and factory gate prices”. | |
The Bank of England and other forecasters expect such pressures to feed into consumer price inflation next year, pushing the cost of living rapidly above the Bank’s 2 per cent official target and squeezeing real incomes. | |
This, in turn, is expected to dampen household spending and slow the economy. | This, in turn, is expected to dampen household spending and slow the economy. |
Official figures show manufacturing output fell by 0.9 per cent in the third quarter of the year, while the overall economy grew by 0.5 per cent. | Official figures show manufacturing output fell by 0.9 per cent in the third quarter of the year, while the overall economy grew by 0.5 per cent. |
Analysts, however, said the latest survey figures, while lower than expected, still painted a brightening picture for the sector. | Analysts, however, said the latest survey figures, while lower than expected, still painted a brightening picture for the sector. |
“Despite the fall in the headline PMI the balance remained above its Q3 average of 52.4. This suggests that the manufacturing sector should experience a bit of a bounceback in Q4,” said Scott Bowman of Capital Economics. | |
“While manufacturing activity lost some momentum after solid post-referendum gains in the previous months, this doesn’t change the picture of improving fundamentals across manufacturing sub-sectors over the course of the year,” said George Nikolaidis of the EEF manufacturers’ organisation. |
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