Manufacturing activity at a 40 month low

Manufacturing is under pressure
Manufacturing is under pressure
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Purchasing managers have reported that UK services and manufacturing activity were at 40-month low in November, with the contraction set to continue.

Information published in the latest Item Club report from professional services firm EY showed that there had been an “inauspicious start” for the new flash purchasing managers.

Manufacturing is under pressure

Manufacturing is under pressure

It was reported that domestic activity was being hampered by a lack of clarity on Brexit as well as business uncertainty being magnified by the forthcoming General Election. It was also reported that there had been overstocking ahead of the scheduled 31 October UK exit from the EU.

Overall new orders contracted for a fourth month running in November and at the fastest rate since July 2016, with domestic and foreign demand both soft. Backlogs of work were run down at the fastest rate for over seven years.

One extract read: Our current expectation is that GDP growth will be limited to just 0.2 per cent quarter-on-quarter in the fourth quarter and the risks to this outlook currently look slanted to the downside. Much could depend on whether consumers spend a decent amount for Christmas.

“There is very little – if anything – in the survey on which to pin hopes for a pick-up in activity in the near term at least . However, much could depend on whether the next couple of months see a significant waning of domestic political and Brexit uncertainties.”

Overall employment fell in the manufacturing and services sectors for a third month running in November, albeit marginally

Howard Archer, chief economic advisor to the EY ITEM Club, said: “Specifically, the composite output index for manufacturing and services weakened to 48.6 in November from 50.0 in October, there moving clearly below the 50.0 level that indicates flat activity. It was also the second month in the past three of contraction in services and manufacturing output.

"Boding ill for activity in the near term at least, joint orders were reported to have contracted in November for a fourth month running and at the fastest rate since July 2016."