A survey on Monday showed that British manufacturing output and new orders fell in July at the fastest pace since May 2020, at a time when factories across Europe are grappling with rising costs and slowing demand.
The UK’s S&P Global/CIPS Manufacturing Purchasing Managers’ Index (PMI) fell last month to 52.1 from 52.8 in June, after slightly revised down from the initial preliminary reading of 52.2 for July.
The decline would have been even greater had it not been for the upward revision of the survey’s employment index.
Survey results and indicators of new orders have fallen sharply to their lowest levels since the start of the COVID-19 pandemic, bringing the economy to a standstill.
The Lloyd’s Bank (LON:) survey of businesses, released on Friday, also showed that manufacturers have been hit hard by rising inflation.
“The drop in total new orders was linked to the cost-of-living crunch, weak domestic demand, customer uncertainty, warmer-than-normal weather and a lower influx of new export business,” said the survey’s lead author, S&P Global.
S&P Global said export orders also shrunk, in part due to Brexit problems.
Input prices and manufacturers’ output rose at the slowest pace in more than a year, which could reassure Bank of England policy makers about the extent of inflationary pressures in the economy.
Economists increasingly believe that the Bank of England will raise interest rates by 50 basis points instead of 25 basis points on August 4, as part of its attempts to prevent the recent spike in inflation to 9.4% from taking root in the economy.
(Reporting by Andy Bruce; Editing by William Schomberg and Toby Chopra; Translated by Flora Gomez)
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