UK manufacturing growth figures released yesterday were rather disappointing. Last month, the reading came in at a downwardly revised 53.8 and analysts had expected the figure to be the same in August. Alas, it wasn’t to be and growth slumped to 52.8. Output rose the least in 17 months and new order growth was the slowest it has been for the past 25-month sequence of expansion.
Importantly, foreign demand declined for the first time since April 2016. This should serve as testament to the negative effect continuing Brexit uncertainty is having on the sector. Until we have more assurance on the terms of the UK’s withdrawal from the European Union we can expect more impacts. The pound duly weakened against the euro and dollar and we might yet see it fall further, especially if we see some poor construction PMI data today.
We also learned that the Treasury and Bank of England are discussing the possibility of keeping Mark Carney on as governor until we have more clarity on Brexit. The Treasury is concerned that it would be extremely difficult to find a new governor while Brexit talks are ongoing.