In the view of James Smith, Developed Markets Economist at ING Bank, the lull in the UK’s manufacturing sector is expected to continue this summer amid ongoing Brexit uncertainty and global trade tensions.
Key Quotes:
“At 48.0, the UK manufacturing PMI is at the lowest level for over six years and suggests that the sector will post negative growth through the second quarter. Much of this has to do with the stockpiling frenzy of the first quarter, which saw firms scramble to boost inventory to try and insulate themselves against the possible supply chain disruptions of a ‘no deal’ Brexit.
We’d expect this trend to continue as we head into the summer months, and this is the main reason why we expect overall second-quarter growth to come in more or less flat. But as we approach the new October Brexit deadline, firms face a tricky decision.
While these challenges will ultimately prove temporary, the combination of ongoing Brexit uncertainty and global trade tensions means the outlook for manufacturers remains tricky. Partly for this reason, we do not expect any change in policy from the Bank of England this year.”
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