British industrial activity reached a 25-month low

September 4, 2018 5:38 amComments Off on British industrial activity reached a 25-month lowViews: 53

British industrial activityBritish industrial activity reported its weakest month in more than two years and export orders declined unusually in August. The data give an alarming signal that the slowdown in the world economy, as well as the approaching Brexit, put pressure on British factories.

The Purchasing Managers’ Index (PMI) for the industry sector, prepared by IHS Markit and the British Purchasing and Supply Institute (CIPS), dropped to 52.8 points, the lowest level since July 2016, just after the vote for Brexit. The analysts expected an average value of 53.8 points.

The British pound weakened against the dollar and the euro after the data were released. According to the economists, it seems to be influenced by the prospect of Britain coming out of the EU in March next year without a trade agreement.

The main reason for the decline in orders is shrinking export orders, which suggests that the likelihood of Brexit without a deal and the moderation of global growth are putting more pressure on the sector.

The new orders are the weakest for over two years, suffering the first drop in export orders reported since August 2016. The labor hiring from factory manufacturers is almost frozen at the same time.

Some companies have linked the weaker influx of new workers from abroad, with the recent slowdown in the world economy rising. The recent weakening of the British pound does not stimulate exports.

The lack of clarity about Brexit conditions, which comes in less than seven months, has helped business confidence to collapse to a 22-month minimum.

The inflationary pressures remain strong, although output prices have risen more slowly than in July.

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