U.K. Manufacturing Activity Shrinks In April Amid Brexit Fears
May 03 2016 - 02:46AM
RTTF2
The U.K. factory activity shrank unexpectedly in April, for the
first time in three years, signaling that the manufacturing sector
entered the second quarter on a poor footing amid "Brexit"
fears.
The Chartered Institute of Procurement & Supply Purchasing
Managers' Index for the manufacturing sector fell unexpectedly to
49.2 in April from a revised 50.7 in March, survey published by
Markit showed Tuesday.
The measure was forecast to rise to 51.2 from March's originally
estimated value of 51. The reading fell below the critical
no-change mark of 50.0 for the first time since March 2013.
The headline index was dragged lower by lackluster trends in
production and new orders and declines in both employment and
stocks of purchases.
"On this evidence manufacturing production is now falling at a
quarterly pace of around 1 percent, and will likely act as a drag
on the economy again during the second quarter and putting greater
pressure on the service sector to sustain GDP growth," Rob Dobson,
a senior economist at survey compilers Markit, said.
The survey's weakness will no doubt be attributed to uncertainty
surrounding the EU referendum, Paul Hollingsworth at Capital
Economics, said. However, the economist cautioned against
attributing too much of the recent weakness to "Brexit"
jitters.
Hollingsworth continues to think that things will improve for UK
manufacturers later this year.
Companies attributed the deterioration in operating conditions
to softer growth of domestic demand and a reduction in new business
from overseas. New export orders fell for the fourth straight month
in April.
There were also a few reports that uncertainties regarding the
oil and gas industry, retail sector and the upcoming EU referendum
had led some clients to delay spending, Markit said.
Job cuts were reported for the fourth consecutive month, with
the rate of decline the fastest since February 2013.
On the price front, survey showed that average input costs fell
at the slowest pace since June 2015, while the rate of decline in
selling prices was only marginal.
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