United Kingdom manufacturing sees 'worrying turnaround' as growth slumps

04 November, 2018, 12:48 | Author: Brooke Harris
  • China’s Caixin PMI Climbed Marginally in October

The consumer goods sector was the hardest hit, while investment and intermediate goods both grew a little.

Japan on Wednesday reported weak industrial output for September partly as the Sino-US trade dispute weighed on its exports, while South Korea's factory output for last month shrank the most in over 1-1/2 years.

Trevor Balchin, Economics Director at IHS Markit, which compiles the survey said: "Although total United Kingdom construction activity rose at a stronger pace in October, the underlying survey data paint a less rosy picture for the sector towards the end of the year".

Volumes of new work from overseas also rose, albeit at the softest rate for three months.

Faced with higher costs and sluggish demand, Chinese manufacturers have been reducing staff levels for about five years straight.

Chinese factory activity slowed last month, official data showed yesterday, adding to a growing list of bad news for the Asian giant. This followed robust gains over the previous three months that meant output was up 2.9% in the three months to August compared with the three months to May.

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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". Greater production requirements and efforts to clear backlogs meanwhile led to a quicker monthly rise in hiring, the fastest for ten months. Anecdotal evidence pointed to transport shortages across North America and shipping delays at ports following typhoons in Asia. Competition for some scarce raw materials also rose, causing further increases in input prices and weaker stock accumulation.

The deterioration in operating conditions was largely driven by a marked reduction in total new sales, it said.

Data firm IHS Markit's purchasing managers' index for the construction industry rose to 53.2, its second-highest level in 16 months.

"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". "However, the rate of selling price inflation was mild, in the context of historical survey data", the survey noted.

The new orders index dipped below the neutral level of 50, with the weakness apparently concentrated in foreign demand, reflected constricting global trade demands. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world's leading financial institutions.IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates.

'Overall activity was marred by a drop in export orders and continuing weak domestic demand as Brexit took another bite out of client confidence, ' Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply said.

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