Blog: Brexit hits UK manufacturing exports – S&P Global/ CIPS survey | HeraldScotland – HeraldScotland

UK companies have seen their new orders decline at the fastest pace for nearly two years this month, with manufacturing recording the steepest fall in export sales since May 2020 as firms experienced Brexit-related constraints, a survey shows.

The seasonally adjusted flash UK composite output index from S&P Global and the Chartered Institute of Procurement & Supply, published yesterday, has come in at 48.3 for November. This is significantly below the level of 50 deemed to separate expansion from contraction, signalling a fourth consecutive monthly decline in business activity in the private sector. And it is only marginally above the 48.2 composite output index reading for October.

Analysing the decline in new orders, S&P Global and CIPS said: “Lower volumes of new business from abroad contributed to the deterioration in order books during November, especially in the manufacturing sector. Latest data pointed to the steepest fall in export sales among manufacturing companies since May 2020. Many survey respondents commented on Brexit-related constraints on export demand in November, in [addition] to the unfavourable global economic backdrop.”

Although employment in the private sector has continued to rise in November, the survey signals the rate of increase has slowed to its weakest pace in 21 months. Service providers signalled a modest upturn in staffing levels, but manufacturers indicated the steepest degree of job-shedding since October 2020.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “A further steep fall in business activity in November adds to growing signs that the UK is in recession, with GDP likely to fall for a second consecutive quarter in the closing months of 2022. If pandemic lockdown months are excluded, the PMI for the fourth quarter so far is signalling the steepest economic contraction since the height of the global financial crisis in the first quarter of 2009, consistent with the economy contracting at a quarterly rate of 0.4%.

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“Forward-looking indicators, notably an increasingly steep drop in demand for goods and services, suggest the downturn will deepen as we head into the new year.”

He added: “The business mood remains among the gloomiest seen over the past quarter-century amid the numerous headwinds, which include the cost-of-living crisis, the Ukraine war, steepening export losses often linked to Brexit, higher borrowing costs, fiscal tightening and heightened political uncertainty.

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“Price pressures meanwhile remain elevated but show further signs of cooling, often linked to weakened demand, which – combined with the growing recession signals – suggest that the Bank of England may start to make less aggressive interest-rate hikes in the coming months.”

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