UK industry suffers amid uncertainty of Brexit
The outlook for UK manufacturing fell to its weakest level since the middle of 2012, according to a key survey, raising the prospect of a Brexit recession for industry and pummelling the pound.
The IHS Markit/Cips manufacturers purchasing managers' index (PMI), a survey that captures sentiment among supply chain managers, fell to a reading of 47.4 in August from 48.0 in July.
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"High levels of economic and political uncertainty alongside ongoing global trade tensions stifled the performance of UK manufacturers in August," said IHS Markit senior economist Rob Dobson.
A reading below 50 represents a contraction from the prior month and the survey is viewed as an early indicator of how an economy is performing ahead of the release of official data.
The pound fell on the news of the weak outlook and as the political battle in Westminster intensified. It dropped a third of a percent against the euro to 90.71 pence.
Manufacturing surveys from the US to Germany, are all indicating that industry is being hit hard by declining global demand, although the services sector has held up well.
"The fall in the manufacturing PMI to its lowest level since July 2012 suggests the industrial sector continued to contract in August, but we still doubt that manufacturing will pull the (UK) economy as a whole into recession," said Andrew Wishart, UK economist at Capital Economics.
Even as the pound dropped, UK shares advanced strongly, with the Ftse 100 rising 1.4pc, double the pace of other European markets. A weak pound is a positive for many UK companies, some of whose shares hit all-time highs yesterday, including Diageo.