UK manufacturing growth hit five-month high before EU vote: PMI

British manufacturing expanded at the fastest pace in five months in June before Britons voted to leave the European Union last week, according to a survey conducted almost entirely before the historic referendum.

The Markit/CIPS UK Manufacturing PMI rose to 52.1 in June from 50.4 in May.

That was the strongest reading since January and better than all forecasts in a Reuters poll of economists, whose consensus forecast was a reading of 49.9.

But data company Markit warned on Friday that “almost all” the data from manufacturers used in its survey were received before the June 23 referendum.

“With 99 percent of survey responses received before the end of 23rd June, the latest PMI signalled that the manufacturing sector has started to move out of its early year sluggishness in the lead up to the UK’s EU referendum,” said Markit economist Rob Dobson.

“Whether this growth recovery can be sustained will depend heavily on whether the current financial and political volatility spills over to the real economy.”

Economists polled by Reuters last week suggested the chances Britain would fall into a recession after last week’s vote were slightly better than 50 percent.

Bank of England Governor Mark Carney said the central bank would probably need to pump more stimulus into Britain’s economy over the summer to cope with the shock of the vote.

Markit’s survey showed British manufacturing exports rose at the fastest pace in seven months.

“The big question is whether any negative impact from uncertainty can be partly offset by a boost to exports resulting from the fall in the pound,” Dobson said.

Source: Reuters

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