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Weak global demand for British manufactured goods also played a part in forcing firms to lay off workers for the seventh straight month, according to a survey of the industry.
However, the pace of decline in activity across the sector eased for a second month, as manufacturers stockpiled raw materials ahead of the 31 October Brexit deadline, and the possibility of leaving the EU without a deal. The IHS Markit purchasing managers’ index picked up to 49.6 in October, from 48.3 in September, where a number below 50 signals contraction.
Rob Dobson, a director at IHS Markit, said the survey was conducted before the election was announced and reflected two months of preparations for leaving the EU on 31 October.
He said that once short-term boosts ahead of the deadline from panicked stock building were excluded, the longer term trend of low investment, falling orders and job cuts meant the outlook was “darker than even these disappointing headline numbers suggest”.
He said: “The high degree of uncertainty is hitting two areas of the manufacturing economy especially hard. The first is the trend in employment, as job losses resulting from disappointing sales are exacerbated by manufacturers implementing hiring freezes until the outlook clears. The second is the investment goods industry, where output and new orders are falling sharply as clients postpone capital spending plans. [...]