Heat comes out of UK manufacturing

The manufacturing sector saw growth cool last month as Brexit uncertainty led to an acceleration of foreign companies shunning the UK and sourcing goods from elsewhere.

Mike Thornton, head of manufacturing at accountancy and business advisory firm RSM. Picture: Contributed
Mike Thornton, head of manufacturing at accountancy and business advisory firm RSM. Picture: Contributed

The closely watched Markit/Cips UK manufacturing purchasing managers’ index (PMI) showed a reading of 53.1 for April, lower than the 55.1 recorded a month earlier.

Any figure above 50 denotes growth and the latest reading was in line with economists’ expectations.

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According to the report, expansion in output and new orders eased and new export business decreased at the second-fastest pace in four-and-a-half years, marking a slowdown on gains made in March when manufacturers stockpiled ahead of what was supposed to be Britain’s EU exit day.

Mike Thornton, head of manufacturing at accountancy and business advisory firm RSM, said: “In normal circumstances a slowdown in output would be seen as a negative, but we’re are not in a normal trading environment.

“In an effort to stockpile products, production levels over the last few months have skewed the figures, so a slowdown shows that manufacturers are using the latest Brexit extension to take stock and plan for the future,” he added.

Howard Archer, chief economic advisor to the EY Item Club think-tank, said: “On the export front, manufacturers are hampered by recently slower global growth. Global trade conflicts and tensions are also a concern for UK manufacturing exporters.

“The relative weakness in the pound may provide some help to UK manufacturing exporters.”

Rob Dobson, director at IHS Markit, said there were reports of “overseas clients acting now to re-route their supply chains away from the UK in advance of Brexit”.

Manufacturing employment declined for the third time in the past four months.