Stronger Pound, sluggish demand weighs on UK manufacturing sector

Source: Dukascopy Bank SA
"Persistent and seemingly deepening manufacturing weakness is very worrying for hopes that UK growth can ultimately become more balanced and less dependent on the services sector and consumer spending"
- Howard Archer, an economist at the IHS Global Insight consultancy

A stronger Pound coupled with sluggish overseas demand continued to weigh on the UK manufacturing sector and exports. The UK factories production dropped in the three months to October for the first time in last two years. The Confederation of British Industry's total orders index declined to -8%, the lowest level since October 2012. New export orders dropped at the fastest pace in three years and new domestic orders decreased over the quarter for the first time since April 2013. Economists said effects of the strong Pound will be felt for some time. Amid a gloomier outlook, manufacturers scaled back hiring in recent months and planned to cut spending on training and innovation. Companies voiced concerns about political and economic conditions abroad. The recent Markit/CIPS survey showed the manufacturing PMI slipped to the lowest level in three months of 51.5 at the end of the third quarter, from August's revised 51.6. Meanwhile, employment in the sector declined for the first time since April 2013, the survey showed.

The initial estimate of GDP later in the day is expected to show the services sector continued to drive overall economic growth in the third quarter. The consensus forecast is for quarterly growth of 0.6% in the July-September period, down from 0.7% in the second quarter


© Dukascopy Bank SA

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