Brexit: Manufacturing misses City growth expectations for June

The Purchasing Managers’ Index was 54.3 in the month, below the 56.3 recorded in May and the 56.3 pencilled in by City of London analysts

Manufacturing expanded by 0.3 per cent in the quarter of 2017 (PA)

UK manufacturing activity came in below expectations in June, with the latest snapshot survey showing a moderation in the rate of growth.

The Purchasing Managers’ Index was 54.3 in the month, below the 56.3 recorded in May and the 56.3 pencilled in by City of London analysts.

Any reading above 50 indicates growth and the long-run average for the series is 51.6.

New business volumes rose at their weakest pace for almost a year and export orders remained weak, said IHS Markit/CIPS, which compile the monthly survey.

The PMI sank to 48.1 in the wake of last June’s Brexit vote before rebounding to as high as 57.3 in April.

Manufacturing accounts for about 10 per cent of UK GDP output.

The Office for National Statistics confirmed on Friday that GDP growth slowed sharply in the first three months of this year to just 0.2 per cent.

Manufacturing expanded by 0.3 per cent in the quarter, following a 1.2 per cent surge in the final quarter of 2016.

“While the survey data add to signs that the economy is likely to have shown stronger growth in the second quarter, further doubts are raised as to whether this performance can be sustained into the second half of the year,” said Rob Dobson, economist at IHS Markit.

Duncan Brock of CIPS added: “A softening of new orders suggested some hesitancy from the UK to commit to new projects, which will be a worry as the domestic market has been the main driver of growth in the past two months.”