U.K. Manufacturing ‘Near Stagnant’ as Export Demand Drops

U.K. factories saw export demand fall for a fourth month in July, restraining growth in the manufacturing industry.

A Purchasing Managers’ Index increased to 51.9 from 51.4 in June, which was the lowest in more than two years, Markit Economics said on Monday. Economists in a Bloomberg survey had forecast 51.5. Export orders fell, with euro-area demand hit by the pound’s strength, according to the report.

Markit said the gauge points to weak growth after manufacturing shrank in the second quarter. U.K. factories are struggling as sterling’s advance and weakness in the euro region weigh on foreign demand. While the domestic economy is strengthening, risks from the external environment mean the Bank of England is likely to keep interest rates at a record low this week.

“Near-stagnant” growth suggests manufacturing is continuing to act as a drag on the economy, said Rob Dobson, an economist at Markit in London. “The struggling manufacturing sector, and the impact of the strong pound on export performance, will be a worry for the Bank of England,” he said.

Markit said growth in total new orders at factories cooled in July to the slowest in 10 months. Employment rose, and selling prices increased the most in almost a year.

Bloomberg

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam