The UK manufacturing sector activity contraction slowed in the month of November, the final report from IHS Markit showed this Monday.
The seasonally adjusted IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) was revised higher to 48.9 in November versus 48.3 expected and two-month lows of 48.3 – November’s first reading.
Key Points
Output, new orders and employment all decline.
Stocks depleted and purchasing reduced following Brexit delay.
Rob Dobson, Director at IHS Markit, commented on the survey
“November saw UK manufacturers squeezed between a rock and hard place, as the uncertainty created by a further delay to Brexit was accompanied by growing paralysis ahead of the forthcoming general election. Downturns in output and new orders continued amid a renewed contraction in exports. The pace of job losses also hit a seven-year high as firms sought to reduce overheads in the face of falling sales. Destocking at manufacturers and their clients following the latest Brexit delay was a major contributor to the weakness experienced by the sector. Inflationary pressures meanwhile showed signs of moderating further, with input costs falling slightly for the first time since March 2016.”
“Signs of a two-speed economy persisted, with intensifying business uncertainty leading to a further steep drop in demand for machinery and equipment as firms cut back on investment, but rising demand for consumer goods suggests that households continue to provide some support to the economy.”
FX Implications
The GBP bulls are rescued by the upward revision to the UK Manufacturing PMI for November, as GBP/USD bounces-off lows at 1.2900. At the press time, Cable trades at 1.2911, still down -0.11% amid UK political uncertainty.
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