UK manufacturing constrained by ongoing political and economic uncertainties in October
Ongoing uncertainties surrounding Brexit, the economic outlook, and the political situation continued to weigh on the UK manufacturing sector during October.
Output and new order flows contracted, leading to further job losses, while firms also ramped up stock-building and purchasing activity in the lead-up to the postponed October Brexit departure date.
The headline seasonally adjusted IHS Markit/CIPS PMI rose to 49.6 in October, up for the second successive month but remaining below the neutral 50.0 mark separating expansion from contraction.
The downturn in manufacturing production continued, although the rate of contraction slowed, with firms reporting that weaker inflows of new business, especially from the domestic market, had led to a further scaling back of output.
This was partly offset by manufacturers who raised production to build up stocks in advance of the October Brexit deadline.
Job losses were seen for the seventh consecutive month, with the rate of decline among the steepest over the past decade.
Lower employment reflected weak demand, softer client confidence, and the non-replacement of leavers and staff redundancies, with there also being reports citing Brexit uncertainty, in some cases resulting in hiring freezes.
Rob Dobson, Director at IHS Markit, said: “The manufacturing downturn continued at the start of the final quarter as uncertainties surrounding Brexit, the economic outlook, and domestic politics all took their toll.”
“However, the underlying picture looks even darker than even these disappointing headline number suggest, as output and new orders fell despite short-term boosts from stock-building activity in advance of the October 31st deadline, which included a rise in exports as clients in the EU sought to mitigate supply risk.”
“The high degree of uncertainty is hitting two areas of the manufacturing economy especially hard. The first is the trend in employment, as job losses resulting from disappointing sales are exacerbated by manufacturers implementing hire freezes until the outlook clears.”
“The second is the investment goods industry, where output and new orders are falling sharply as clients postpone capital spending plans.”
“With a further Brexit extension confirmed and the prospect of a December general election, it looks as if the spectre of uncertainty will cast its shadow over manufacturing for the remainder of 2019.”