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UK factory output dives to seven-year low as Brexit fears rise UK factory output dives to seven-year low as Brexit fears rise
(32 minutes later)
The UK’s manufacturers have recorded the sharpest drop in factory output for seven years as mounting concerns over no-deal Brexit and the slowing global economy hit orders across the country. UK manufacturers have recorded the sharpest drop in factory output for seven years as mounting concerns over a no-deal Brexit and the slowing global economy hit orders across the country.
The monthly snapshot from IHS Markit and the Chartered Institute of Procurement and Supply, which is closely watched by the Treasury for early warning signals from the UK economy, showed that activity plunged in August to the lowest levels since July 2012. The monthly snapshot from IHS Markit and the Chartered Institute of Procurement and Supply, which is closely watched by the Treasury for early warning signals from the UK economy, showed that activity fell in August to the lowest levels since July 2012.
The report found that EU-based customers are shunning British manufacturers as the risk of no-deal Brexit mounts, rerouting supply chains away from the UK as the likelihood of border disruption after 31 October increases. The report found that EU-based customers were shunning British manufacturers and rerouting supply chains away from the UK as the likelihood of border disruption after 31 October increased.
End to Brexit chaos cannot come too soon for factories | Larry ElliottEnd to Brexit chaos cannot come too soon for factories | Larry Elliott
Orders from the US and Asia have fallen as the world economy slows, in a sign of the tough challenge facing the UKto strike new trade deals outside the economic bloc.Orders from the US and Asia have fallen as the world economy slows, in a sign of the tough challenge facing the UKto strike new trade deals outside the economic bloc.
The IHS Markit/Cips manufacturers purchasing managers’ index (PMI) plunged to 47.4 in August, down from 48.0 a month earlier. Anything above 50.0 separates economic growth from contraction. The IHS Markit/Cips manufacturing purchasing managers’ index (PMI) fell to 47.4 in August, down from 48.0 a month earlier. Anything above 50separates growth from contraction.
Rob Dobson, a director at IHS Markit, which compiles the survey, said: “The current high degree of market uncertainty, both at home and abroad, and currency volatility will need to reduce significantly if UK manufacturing is to make any positive strides towards recovery in the coming months.” Rob Dobson, a director at IHS Markit, said: “The current high degree of market uncertainty, both at home and abroad, and currency volatility will need to reduce significantly if UK manufacturing is to make any positive strides towards recovery in the coming months.”
The warning signs from the manufacturing sector come as Britain descends further into political turmoil, as opponents of no-deal Brexit attempt to stop Boris Johnson from leaving the EU without an agreement with Brussels in order to prevent lasting economic damage. The warning signs from the manufacturing sector come as Britain descends further into political turmoil, as opponents of a no-deal Brexit attempt to stop Boris Johnson from leaving the EU without an agreement with Brussels in order to prevent lasting economic damage.
Mirroring manufacturers’ contingency plans from around the time of the initial 29 March Brexit deadline, companies have stepped up plans to avoid disruption after Halloween. IHS Markit/Cips said firms had restarted plans to to stockpile goods. In another signal of firms preparations, the Japanese carmaker Toyota has drawn up a plan to halt production at its factory in Burnaston in anticipation of disruption to deliveries of parts. Mirroring manufacturers’ contingency plans from around the time of the initial 29 March Brexit deadline, companies have stepped up plans to avoid disruption after Halloween. IHS Markit/Cips said firms had restarted plans to to stockpile goods. In another signal of firms’ preparations, the Japanese carmaker Toyota has drawn up a plan to halt production at its factory in Burnaston, Derbyshire in anticipation of disruption to deliveries of parts.
Fears over manufacturing jobs have begun mounting as Brexit drags down the UK economy and global growth slows. Manufacturing employment fell at one of the fastest rates in six-and-a-half years in August, with job cuts driven by cost saving plans, slower economic growth and the continued impact of Brexit uncertainty. Fears over manufacturing jobs have started to rise as Brexit drags down the UK economy and global growth slows. Manufacturing employment fell at one of the fastest rates in six-and-a-half years in August, with job cuts driven by cost-saving plans, slower economic growth and the continued impact of Brexit uncertainty.
Labour and the unions warned that further job losses could come as a consequence of a no-deal departure.Labour and the unions warned that further job losses could come as a consequence of a no-deal departure.
Neil Foster, a research and policy officer at the GMB trade union, said: “Crashing out of the EU without a deal would cause mayhem, delays and increase costs for our importers, exporters and their supply chains.Neil Foster, a research and policy officer at the GMB trade union, said: “Crashing out of the EU without a deal would cause mayhem, delays and increase costs for our importers, exporters and their supply chains.
“The government should be working to rebuild confidence, instead ministers are risking more and more decent manufacturing jobs with their reckless approach.”“The government should be working to rebuild confidence, instead ministers are risking more and more decent manufacturing jobs with their reckless approach.”
According to the latest snapshot from IHS Markit/Cips, there were steep reductions in new orders across several industries, against a backdrop of heightened political chaos and falling export demand across the world amid the US-China trade war. According to the latest snapshot from IHS Markit/Cips, there were steep reductions in new orders across several industries, against a backdrop of heightened political chaos and falling export demand across the world as the US-China trade war rages on.
Global factory output has plunged into recession in recent months as the trade war between the world’s two biggest economies intensifies, which has dented economic growth in several major industrialised nations. Global manufacturing has fallen into recession in recent months as the trade war between the world’s two biggest economies intensifies, which has dented economic growth in several major industrialised nations.
The UK has fallen to the bottom of the G7 growth league table, while growth in Germany has gone into reverse and Italy stalled over the second quarter.The UK has fallen to the bottom of the G7 growth league table, while growth in Germany has gone into reverse and Italy stalled over the second quarter.
Separate figures from IHS Markit on Monday showed that manufacturing activity in the eurozone dropped for a seventh month in a row in August amid continued weak demand for goods. The eurozone manufacturing PMI index rose to 47.0 last month from a reading of 46.5 in July, although remains well below the 50.0 mark and at the lowest level since December 2012. Separate figures from IHS Markit on Monday showed that manufacturing activity in the eurozone contracted for a seventh month in a row in August as weak demand for goods continued.
Manufacturing sectorManufacturing sector
Manufacturing dataManufacturing data
EconomicsEconomics
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