LONDON • UK manufacturing growth unexpectedly slowed to the weakest in two years last month as export orders contracted amid a weakening of the global economy.
IHS Markit’s Purchasing Managers’ Index fell to 52.8 in August, the firm said yesterday, down from 53.8 a month earlier, and below the 53.9 forecast by economists. A gauge of new orders for exports fell below the 50 level that indicates expansion for the first time since April 2016.
The pound fell after the report and traded down 0.7% at US$1.2873 (RM5.32) as of 11:16am in London yesterday.
Markit’s report also showed manufacturing production rose at the slowest pace in 17 months, while both input and output prices increased, with companies reporting higher costs of metals, electronic components and energy which were passed onto clients. Optimism among firms slumped to a 22-month low, with some citing ongoing uncertainty about Brexit and the exchange rate.
The UK’s decision to leave the European Union has already cost Britain more than 2% of economic output, according to a separate report published yesterday by UBS Group AG. Investment is around 4% weaker because of the vote, the analysis showed.
The manufacturing slowdown means the sector is unlikely to contribute to add to economic growth in the third quarter, Markit said.
“Foreign demand declined for the first time since April 2016, despite the weakness of pound, amid reports of slower global economic growth and the increasingly uncertain trading environment.”