Britain's manufacturers start 2018 on the back foot as the sector's Brexit-driven surge falters

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February 1, 2018 9:49 AM

IHS Markit's latest PMI data for the manufacturing sector of the British economy was released on Thursday morning.

LONDON — Britain's manufacturing sector endured a tough start to 2018, with growth in the sector slowing according to the latest PMI survey released by IHS Markit on Thursday.

January's reading for the sector came in at 55.3. The previous month's reading was 56.3, while growth in the month had been forecast by economists polled prior to the release to be 56.5.

The purchasing managers index (PMI) figures from IHS Markit are given as a number between 0 and 100. Anything above 50 signals growth, while anything below means a contraction in activity. So the higher the number is, the better things look for the UK.

"The UK manufacturing sector reported an unwelcome combination of slower growth and rising prices at the start of 2018," Rob Dobson, a director at IHS Markit said in a statement released alongside the data.

"Though the PMI showed continued growth, it was the weakest since June as shortages in commodities and raw materials resulted in a scrabble to complete goods, suppliers disappointed with longer delivery times and costs were on the rise again," Duncan Brock, Director of Customer Relationships at CIPS, which compiles the survey with IHS said.

Manufacturing has been a rare economic success story in the UK since the vote to leave the EU in June 2016, thanks to the weakness of the pound since the vote.

The slump in the pound since the vote has made most British goods cheaper for overseas buyers, boosting manufacturing businesses as a result. However, as the pound recovers, particularly against the dollar, that boost is likely to wane somewhat.

Here's the chart showing the longer term trend:

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