The industry is still hopeful of further rate reduction from the apex bank to boost investment.
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The country’s manufacturing sector saw a significant uptrend in July registering the highest reading since April this year, as both production and new orders rose, a key macro-economic data showed on Monday.
It also found that the rate of job losses across the sector was its second-sharpest for nearly three-and-a-half years.
“Markit said that the deterioration was widespread across sectors and firm sizes, suggesting that Brexit uncertainty was weighing on many firms”.
He 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.
The expansion in order books was led by consumer goods producers.
‘On that score, the weak numbers provide powerful arguments for swift policy action to avert the downturn becoming more embedded and help to hopefully play a part in restoring confidence and driving a swift recovery’. That overshadowed a boost to export orders from a weaker pound, which makes United Kingdom goods cheaper.
Improving business conditions reflected stronger rates of output, new orders and employment growth during the latest survey period, Markit said.
Although the rate of production growth in July was the weakest for nine months, output has now risen in each of the last 32 months and companies continued to hire extra staff at a solid pace.
Nikkei said the reported job cuts were only marginal, however.
“The downside of the currency was an upsurge in input price inflation to a five-year high on the back of rising import costs”, said Dobson.
David Noble, group chief executive officer at the Chartered Institute of Procurement and Supply (CIPS), said: “After seven months of modest drops, employment figures showed an entrenchment in uncertainty with a sudden deterioration – the second sharpest drop in nearly three-and-a-half years, as businesses chose redundancy and restructuring to secure themselves against more possible bad news ahead”.
That is a large drop from this time previous year, when it was 0.8 – but a rise from -27.7, where it fell just after the referendum.
The Monetary Policy Committee will meet on Thursday to decide whether to reduce the base interest rate from its current historic low of 0.5%.
Some economists have even suggested that Britain could be heading towards another recession.
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The decline in the headline PMI was mainly driven by a 4.8-point drop in the business activity index to 49.5.
