The seasonally adjusted Nikkei India Manufacturing Purchasing Managers Index (PMI) rose to 51.8 in July as compared to 51.7 in June.
Advertisement
Costs in the manufacturing sector surged to a five-year high last month, ‘reflecting a sterling-induced rise in import costs and higher metal and commodity prices’.
The index for new business rose to 49.7 from 47.3 in the previous month, which was the lowest since September 2011.
David Noble, group chief executive at the Chartered Institute of Procurement & Supply (CIPS), said “Brexit contagion” had hit new orders and left overall output at rates last seen during the financial crisis.
A separate but similar survey by the financial information services provider IHS Markit shows manufacturing output hit an eight-month high in July, with USA manufacturers signaling a relatively strong start to the third quarter of 2016. The gauge hasn’t been this weak since March 2009, when the BOE cut its benchmark interest rate to a record low and launched quantitative easing to aid the economy.
The New Orders Index registered 56.9%, a decrease of 0.1 of percentage point from the June reading. There was also mention of natural wastage, restructuring, redundancies and outsourcing leading to job cuts.
“Reduced volumes of new work to replace completed projects contributed to a fall in employment for the first time in just over three years”.
Coal output grew the fastest at 12%, a 19-month high, followed by cement that posted 10.3% growth in production.
Executives at Ford and Peugeot have already warned that they are going to have to increase prices in the United Kingdom following the drop in value of the pound, with Ford’s CFO Bob Shanks reporting that the Brexit vote cost the company around $60 million in the second quarter of 2016.
Rob Dobson, senior economist at Markit, said: ‘The pace of contraction was the fastest since early-2013 amid increasingly widespread reports that business activity has been adversely affected by the European Union referendum.
A closely watched gauge of activity published Wednesday by financial information firm IHS Markit Ltd. found steep falls in output, new business inquiries and sentiment among firms in the U.K.’s powerhouse services sector, which accounts for nearly 80% of the British economy.
Advertisement
“Exporters did report a boost from the weaker pound, however, the improvement in exports was less than previously estimated due in part to sluggish overseas demand”.
