The Brexit-driven surge in British manufacturing is starting to stutter

IHS Markit's manufacturing PMI survey for December: 56.3.
Reading is significantly down from November's figure, suggesting the sector may be starting to stutter.
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.

LONDON — Britain's manufacturing sector slowed down at the end of 2017 but remained solid, according to the latest PMI survey released by IHS Markit on Tuesday.

December's reading for the sector came in at 56.3. That was down from 58.2 in November, which was the highest figure in more than four years, but still a solid performance.

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 ended 2017 on a positive note," IHS Markit said in a statement. "Although December saw rates of expansion in output, new orders and employment slow from November’s highs, growth in all three remained solid and well above long-run trends."

Here's the chart:

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said in an email: "British manufacturers ... are failing to make the most of the rebound in global trade; note that the UK’s PMI now is four points below the Eurozone’s, the biggest under performance since June 2008.

"UK manufacturers have cut investment since the Brexit vote and are struggling to find skilled workers. As result, work backlogs are increasing quickly and supply chain delays are worsening."

While a slowdown is evident, IHS Markit's survey was largely positive, with Rob Dobson, a director at the firm noting that the sector "ended 2017 on a positive footing."

"Although growth of output and new orders moderated during December, rates of expansion remained comfortably above long-term trend rates. The sector has therefore broadly maintained its solid boost to broader economic expansion in the fourth quarter. The outlook is also reasonably bright, with over 50% of companies expecting production to be higher one year from now."

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.

IHS Markit published manufacturing growth figures for other European countries on Tuesday. The Eurozone-wide figure came in at its highest level since the PMI survey began in its current form in 1997.

"The eurozone manufacturing sector ended 2017 on a high note. Strong rates of expansion in output, new orders and employment pushed the final IHS Markit Eurozone Manufacturing PMI to 60.6 in December, its best level since the survey began in mid-1997," IHS Markit said.