UK industrial activity slowed sharply in July 2016

UK industrial activity slowed sharply in July 2016 after a month earlier the majority of Britons surprisingly voted for leaving the European Union (EU). The Purchasing Managers’ Index (PMI) fell to 48.2 points in July 2016 and confirmed information from preliminary data that the sector is shrinking. The data from July 22 showed a value of 49.1 points. The rate of decline was the sharpest since early 2013, following a number of studies that suggested that business activity is adversely affected by the Brexit.

The declines in production volume, new orders and employment are higher than initial estimates. The decline is felt throughout the industry, the volumes are bent at companies of all sizes and all sectors. The exporting firms, however, reported growth because of the weak GBP. The improvements in exports were weaker than initial estimates, partly because of weak demand abroad.

The Purchasing Managers’ Index (PMI) value above 50 points shows an expansion, while value below 50 points show contraction in the sector. The traders closely monitored these trials as managers in orders usually have access to the preliminary data on the performance of the business and therefore become leading indicators index for the whole economy.

After the Brexit referendum, UK has experienced a sharp slowdown in economic activity. In June, retail sales registered a decrease, while the Confederation of British Industry expects more radically decrease in July.

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