UK Export Orders Fall

Posted on: 03/09/2018

Markets have reacted nervously to a closely watched report that found British export orders had fallen for the first time in over two years.

The IHS Markit/CIPS PMI surprised markets with a report that export orders had fallen and manufacturing output fell to its lowest level in 25 months, while at least retaining positive growth. Job creation was stagnant while business optimism fell to a 22 month low. 

Rob Dobson, Director at IHS Market commented, "Foreign demand declined for the first time since April 2016, despite the weakness of sterling, amid reports of slower global economic growth and the increasingly uncertain trading environment. Inflows of new work from both domestic and overseas sources will need to strengthen if manufacturing is to show renewed vigour in the coming months."


Dunan Brock, of the Chartered Institute of Purchasing and Supply said, “With a subdued global economy threatened by escalating trade wars and Brexit uncertainty making its mark, it’s unclear where future opportunities to sustain the health of the sector will come from.”

The report is closely watched because it is compiled from reports submitted by puirchasing managers on actual sales and order levels, and has been shown to closely mirror the actual economic performance. It points to a potential "double whammy" for exporting companies, as the uncertainty that Brexit is producing meets an apparent downturn in global business, thought to be a reaction to growing protectionism as several major eocnomies have followed the United States in imposing high tariffs to protect domestic industry. A spokesman for MoneyCorp suggested that the growing uncertainty was beginning to undermine efforts to grow international business. "It's tough to nail new orders from overseas when you have no certainty over what trading rules will look like in six months time." 

 

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