U.K. Manufacturing Growth Recovers From 27-Month Low in November
(Bloomberg) -- U.K. manufacturing growth recovered from a 27-month low in November as domestic new orders picked up and firms built up stocks to protect against Brexit risks.
IHS Markit’s Purchasing Managers Index for the industry rose to 53.1 last month, up from a 51.1 in October and beating economists’ estimates for reading of 51.7. Still, Markit noted that growth remained subdued, with new export orders decreasing for a second consecutive month.
- The domestic market was the main source of new contracts, Markit said, with increases linked to new product launches and client stock-building.
- Manufacturers noted that stocks of purchases were being raised to protect against Brexit and supply-chain risks.
- Export orders saw their first back-to-back drop since early 2016, with firms citing reduced interest and Brexit uncertainty as the reasons for the decline.
- The overall degree of optimism among companies fell to a 27-month low, as “Brexit uncertainty, exchange rate concerns and a slowing economy weighed on confidence,” Markit said.
- Markit is due to publish similar indexes for the U.K.’s construction and dominant services sector this week.
- The surveys are among the last key data points before the Bank of England announces its next interest rate decision on Dec. 20.
- Michael Saunders, one of the most hawkish members of the Monetary Policy Committee, said last month that the BOE may need to increase interest rates at a quicker pace than currently envisaged by markets.
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