Investing.com - Activity in the U.K. manufacturing sector slowed further last month to a four-month low, as uncertainty over the outcome of negotiations for Britain's departure from the European Union weighed on business sentiment.
Research firm IHS Markit said its manufacturing purchasing managers’ index fell as expected to 52.0 in February, from 52.6 at the beginning of the year. That was a fourth-month low and its second-lowest level since July 2016 - the month following the U.K.’s vote to leave the EU.
Although stronger than French and German factory PMIs, IHS Markit said the increase in British factory output mostly reflected stockpiling and a drive to cut work backlogs in case the country fails to get a transition deal to smooth the shock of Brexit.
The PMI’s stocks of purchases index rose in February to 59.1, the highest level on record for any G7 PMI.
“With Brexit day looming, U.K. manufacturers continued to implement plans to mitigate potential disruptions,” IHS Markit director Rob Dobson said.
“The current elevated degree of uncertainty is also having knock-on effects for business confidence and employment, with optimism at its lowest ebb in the survey’s history and the rate of job losses accelerating to a six-year high,” Dobson added.
“Manufacturing and the broader U.K. economy therefore face a difficult 2019, with the slowdown being exacerbated later in the year as inventory positions are unwound and Brexit-related headwinds likely to linger,” he concluded.