United Kingdom manufacturing output declines amid Brexit fears and trade tensions

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United Kingdom manufacturing output declines amid Brexit fears and trade tensions

Meanwhile, factory gate charges also increased at a strong pace in October, with the rate of inflation accelerating slightly since the previous month.

Finally, output expectations towards the coming 12 months improved, with firms suggesting that anticipations of further new order growth drove optimism.

The U.K. manufacturing outlook darkened during October, according to the latest IHS Markit PMI survey, as "trade tensions" and "Brexit uncertainty" led to a decline in new orders and employment among the nation's industrial firms. The US and countries in Southeast Asia were mentioned as destinations for new export orders.

The PMI for large firms was 51.6 percent, down 0.5 percent on the month, but still 1.4 percent higher than manufacturing PMI, so the steady operations of large firms are the main prop of manufacturing growth.

EEF economist Francesco Arcangeli commented: "It appears that reality abruptly kicked in October with today's manufacturing PMI illustrating that manufacturing activity slowed sharply, ahead of the Bank of England's MPC decision later today".

The good news was that both new orders placed with manufacturers and inventories of purchased goods grew at a faster clip. Overseas demand slowed, for the second time in the last quarter, as trade concerns globally take their toll.

Manufacturing accounted for 30% of China's gross domestic product in the first half of this year, while the services sector contributed 54%, according to Caixin calculations based on government data.

"The trade/import and export sector continued to drop in job openings in the third quarter of 2018, reflecting the continuous influence of the U.S".

Amid reports of higher prices for chemicals, energy and metals, average cost burdens increased further. Subcontractor rates also continued to rise at a relatively strong pace during the month.

"I suspect this growth rate is sending a false signal", said Fiore.

"Alongside the halt in hiring, the increasingly defensive position of United Kingdom manufacturers was also reflected in the slight decreases in purchasing activity and inventory holdings, which firms linked to protecting cash flow and cost-cutting". In a clear sign that inflationary pressures are continuing to build, strong customer demand meant firms were often able to push cost increases through to selling prices. "New orders and employment both fell for the first time since the Brexit vote".

The Purchasing Managers' Index (PMI), a key gauge of factory conditions, came in at 50.2 for the month, down from 50.8 in September, the National Bureau of Statistics said. "Until firms have more clarity about what a future relationship with the European Union looks like, investment levels are likely to continue to flatline and confidence will remain low", she said.

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