U.K. Factories Extend Slump Even as Brexit Preparations Resume
Factory workers fine tune bricks stacked by robotic arms during production at the Acme Brick Co. manufacturing facility in Leeds, Alabama, U.S.(Photographer: Luke Sharrett/Bloomberg)

U.K. Factories Extend Slump Even as Brexit Preparations Resume

(Bloomberg) --

U.K. manufacturing extended its longest slump since 2009 in September as even renewed stockpiling for Brexit didn’t foster a return to growth.

While the pace of the contraction slowed, measures of new orders and output continued to fall, while employment dropped at the fastest pace in more than five years, IHS Markit said Monday.

The domestic market was particularly weak in the month, Markit said, although there were also reports that foreign demand was hurt by “Brexit uncertainty and clients routing supply chains away from the U.K.”

U.K. Factories Extend Slump Even as Brexit Preparations Resume

The overall decline came despite firms boosting stockpiles as the Oct. 31 Brexit deadline approaches, actions that boosted the sector earlier in the year. Figures published Monday showed the U.K. economy experienced major distortions in the second quarter after firms ran down stockpiled goods from the run-up to the original March 29 Brexit deadline.

Key Insights

  • Markit’s index edged up to 48.3, from 47.4 in August. The median estimate of economists in a Bloomberg survey was for a small decline
  • The five-month run below the 50 level that separates growth from contraction is the longest since mid-2009
  • Manufacturing employment fell at the faster pace since February 2013, while business optimism remained subdued
  • Input buying increased in the month, while pre-production stock levels rose for the first time in five months

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  • Prime Minister Boris Johnson has pledged to leave the European Union with or without a deal on a transition on Oct. 31, even though Parliament has legislated to force a delay if no deal is reached
  • Markit is due to publish similar indexes for the U.K.’s construction and dominant services sector later this week

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