British manufacturers cut jobs last month at the fastest rate since 2012, a survey showed on Monday, as pressures from Brexit and a global trade slowdown caused the sector’s longest decline since the financial crisis.
The IHS Markit/CIPS manufacturing Purchasing Managers’ Index (PMI) sank to 48.9 in November from 49.6 in October, a slightly smaller decline than an initial flash estimate of 48.3.
But the PMI stuck below the 50 level that divides growth from contraction for a seventh consecutive month, the longest such run since 2009, as the country headed for an early election on Dec. 12 intended to end a parliamentary logjam over Brexit.
‘November saw UK manufacturers squeezed between a rock and hard place, as the uncertainty created by a further delay to Brexit was accompanied by growing paralysis ahead of the forthcoming general election,’ IHS Markit economist Rob Dobson said.
Britain’s economy has slowed since the referendum decision in June 2016 to leave the European Union, with manufacturing especially hard hit due to concerns about disruption to supply chains, on top of pressures from the US-China trade war.
Britain faced the risk of leaving the EU without a transition deal on Oct. 31, prompting many manufacturers to build up emergency stocks of raw materials, before a last-minute delay until Jan. 31.
In November, factories reduced stocks at the fastest rate since June 2018, weighing on overall demand, the PMI showed.
The PMI’s employment component sank to 46.8 from 47.1, representing the biggest loss of jobs since 2012, though less of a fall than in the flash estimate.
Although the unemployment rate is its lowest since 1975, official figures have shown that British employers in the third quarter cut jobs by the most for any quarter in the past four years. Monday’s data suggest this risks continuing.
Manufacturing makes up around 10 per cent of Britain’s economy. In the third quarter output in the sector fell by 1.4 per cent from a year earlier, while growth in the economy as a whole slowed to 1.0 per cent, its weakest since 2010.
Earlier on Monday, the Confederation of British Industry forecast economic growth of 1.2 per cent for 2020 and 1.8 per cent in 2021, assuming Britain leaves the EU with a Brexit transition deal on Jan. 31 and then strikes a deal to preserve tariff-free trade.
Trade association Make UK cut its forecast for manufacturing growth to 0.1 per cent for 2019 and 0.3 per cent for 2020, down from a previous forecast of 0.6 per cent.
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