UK factories lose more momentum in October - PMI

LONDON: British factories lost more momentum in October, especially among consumer goods makers, according to a survey which added to signs of a slowdown in the economy as the number of coronavirus cases mounts again.

However, a measure of optimism for the year ahead hit its highest level in nearly three years.

The IHS Markit/CIPS manufacturing Purchasing Managers’ Index (PMI) fell to 53.7 from September’s 54.1 but was up a touch from a preliminary reading and remained above the 50.0 threshold denoting growth.

Stock-building by clients in Europe ahead of a possible no-deal end to Britain’s post-Brexit transition period on Dec. 31 and increased demand from the recovering economies of China and the United States boosted exports, IHS Markit said.

Intermediate and investment goods industries reported a strong October. But consumer goods firms, which are more sensitive to short-term changes in the economy, saw output and new business fall for the first time since they began to recover from the COVID-19 shock earlier this year.

Britain’s economic recovery from the coronavirus lockdown has lost steam as the pandemic builds again and as the government scales back its jobs support scheme.

Most economists polled by Reuters expect the Bank of England to announce a fresh increase in its bond-buying stimulus programme on Thursday.

Monday’s PMI survey showed job losses were most marked in the consumer goods sector. By contrast, staffing levels rose for the first time in eight months in the intermediate goods category.

Over 60% of companies expected output to rise over the coming year, compared to 10% forecasting a decline.

“However, some firms also raised concerns about the potential impact of both the ongoing pandemic and Brexit uncertainty,” Markit said.

Input prices rose by the most since December 2018 and some of the increase was passed on to clients.

The survey was conducted between Oct. 12-27.