By Andy Bruce
LONDON (Reuters) - British manufacturing contracted last month at the fastest rate in seven years, rocked by the deepening Brexit crisis and the global downturn, boding poorly for the chances of an economic rebound in the third quarter, a survey showed on Monday.
The IHS Markit/CIPS UK Manufacturing Purchasing Managers' Index (PMI) fell to 47.4 from 48.0 in July, a full point lower than the median forecast in a Reuters poll of economists and well below the 50 dividing line for growth and contraction.
Only German manufacturing fared worse among the national PMIs produced for Europe by data company IHS Markit.
"The big picture is that manufacturing is on track to contract for a second consecutive quarter, and a meaningful recovery is unlikely given the ongoing struggles of global manufacturing," Andrew Wishart, UK economist at consultancy Capital Economics, said.
Britain's overall economy shrank in the second quarter too, a hangover from the stockpiling boom in advance of the original March Brexit deadline. Another contraction in the current quarter would officially herald a recession.
Surveys from Lloyds (LON:LLOY) Bank and the European Commission last week also suggested that Britain's economy is stalling, raising the stakes for Prime Minister Boris Johnson, who has promised to take Britain out of the EU with or without a deal.
Respondents to the PMI survey cited the global slowdown and Brexit as reasons for lower demand from domestic and foreign customers, some of whom are moving supply chains away from Britain before the Oct. 31 deadline for leaving the EU.
Survey compiler IHS Markit said its survey was consistent with a decline in the official measure of factory output of nearly 2% quarter-on-quarter. Manufacturing accounts for 10% of British economic output.
The survey's index of future output fell to its lowest level since records started in 2012.
Activity across manufacturing declined, with production in the consumer goods industry dropping at the fastest rate since February 2009, around the nadir of Britain's last recession, IHS Markit said.