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UK Manufacturing has been recovering

Manufacturing in the UK slumped in 2016 after an underwhelming 2015. Activity was slowest and even contracted around the time of the Brexit vote. Indeed this was a time of uncertainty. It should be noted that the British Pound (GBP), has also been falling, even before Brexit was voted in. The falling exchange rate of the home currency has alleviated the manufacturing slump.

Today, we got the Manufacturing PMI release from the UK for the month of September, which was better than expected.

August: 53.4
Forecast for Sept: 52.1
September: 55.4*

* Manufacturing is considered growing if the PMI is above 50, and contracting if the PMI is under 50. From the historic chart below, we can see that Manufacturing contracted 3 times, all around the time of the Brexit referendum. 


5 years of UK Manufacturing data:

According to the official release:

Conditions in the UK manufacturing sector continued to improve at the end of the third quarter. Rates of expansion in output and new orders accelerated further, rising at rates rarely achieved since the middle of 2014. The domestic market remained a prime driver of new business wins, while the weaker sterling exchange rate drove up new orders from abroad...

...The recent rebound in the manufacturing sector encouraged companies to take on additional staff during September. Employment rose for the second straight month, after declining throughout the earlier part of the year. Job creation was linked to increased capacity requirements, new order growth and the launch of new product lines...

...Underpinning the latest scaling up of output was a marked increase in new business. New orders rose to the second-greatest extent since mid- 2014. Companies linked the latest increase to higher sales to both domestic and overseas clients, supported by promotional activity and (for exports) the weaker sterling exchange rate....(Markit/CIPS UK Manufacturing PMI)

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