Overseas clients are acting to re-route their supply chains away from the UK.
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Britain’s manufacturing sector suffered a slowdown in growth in April as Brexit resulted in an acceleration of foreign firms shunning the UK and sourcing goods from elsewhere.
The Markit/CIPS UK manufacturing purchasing managers’ index (PMI) showed a reading of 53.1 last month, lower than the 55.1 recorded in March.
A figure above 50 indicates growth and the reading was in line with economist expectations.
Expansion in output and new orders slowed and new export business decreased at the second-fastest pace in four-and-a-half years, marking a slowdown on gains made in March when manufacturers stockpiled ahead of what was supposed to be Britain’s EU exit day.
Worryingly, Rob Dobson, director at IHS Markit, which compiles the survey, said there were reports of “overseas clients acting now to re-route their supply chains away from the UK in advance of Brexit”.
He added: “The upturn in the UK manufacturing sector eased at the start of the second quarter. Growth of output and new orders slowed, leading to job cuts for the third time in the past four months.
“The trend in new export business was especially weak, as high stock holdings at clients and slower global economic growth led to reduced demand from key markets such as the European Union, the USA and China.”
Brexit stockpiling continued to support production output as Britain’s exit day remains uncertain, with a new deadline of October 31 to come up with a deal.
Manufacturing employment declined for the third time in the past four months during April, with job losses attributed to “natural wastage, improved efficiency and workforce restructuring”.
“Companies plan to use new product launches, new technologies and improved marketing strategies to drive growth forward in the coming months.
“However, Brexit uncertainty continues to weigh on plans, as some firms remain concerned about future growth prospects and the likely impact on output and demand from the unwinding of inventory positions later in the year,” Mr Dobson added.