Manufacturing – A Post-Brexit Update
Nearly three months after the EU referendum, Coffin Mew considers recent research into the impact of the Brexit vote on the manufacturing industry.
Bounce back from shock vote
The British manufacturing industry saw a strong rebound in manufacturing output and incoming orders in August, according to a recent Markit/CIPS Purchasing Managers’ Index (PMI) survey.
The PMI was at 53.3 in August, recovering from the 41-month low of 48.3 recorded in July following the EU referendum. The 5.0 point increase on the July figure is the biggest monthly increase since the aftermath of the financial crisis in March 2009 and is the joint-greatest increase in the survey’s 25 year history.
The recovery from the dramatic low in July indicates that manufacturing work postponed or cancelled following the Brexit result has been restarted.
Impact of fall in sterling
The fall in the value of the pound may be fuelling overseas demand for British products. According to the latest CBI monthly Industrial Trends Survey, orders for British manufacturing exports hit a two-year high in August. Chemical manufacturers accounted for more than half of this rise.
Despite the improvement in exports, total order books were largely unchanged but still above expectations. The Survey also found that output growth is expected to remain steady over the next three months.
It is too early to say whether the rebound in growth and increase in export orders will be sustained particularly given the fluctuation in the sterling rate, but the figures may prompt economists to shift to a brighter outlook for the economy over coming months, which will provide further reinforcement for the manufacturing industry.
For further information, please contact our Manufacturing and Engineering legal specialist Hayley Bevis, Senior Associate Solicitor in our Corporate team on 023 9236 4321 or firstname.lastname@example.org.