This was the first growth in activities since February 2015, with sub-indexes of output, new orders and inventory all surging past the 50-point mark that separates growth from decline.
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Rob Dobson, Senior Economist at Markit, said the downturn was industry-wide with output scaled back across firms of all sizes.
Lukman Otunuga, a research analyst at FXTM, said: ‘Britain’s manufacturers seem to be suffering heavily post-Brexit and this could attribute to the factors which prompt the Bank of England to take action in an effort to regaining some economic stability’.
Supported by greater demand from both domestic and external markets, new business orders rose at the fastest pace since March.
The uncertainty after the European Union referendum was the main factor that weighed on business activity in July, especially in the commercial building sector, Markit said.
“The one bright spot was a rise in export orders, no doubt helped by the decline in the pound”.
Hiring was also put on hold last month after three and a half years of rising service sector employment.
Moore signaled that there were positive points such as the fact that the decline in construction output was little-changed from June’s seven-year low and some reports showed that demand patterns had been more resilient than expected given the uncertain business outlook.
They are predicting “referendum shock” to trigger a technical recession, with GDP declining by 0.4% in the third quarter and 0.3% in the final three months of the year before “stabilising into a prolonged and shallow contraction”.
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The Office for National Statistics said the higher-than-expected figure was driven in part by a swing in industrial production, which rose 2.1% over the period – matching figures last seen 17 years ago – compared with a 0.2% fall in the quarter before. It seems nearly a foregone conclusion that this week will see the Bank of England slash its growth forecasts and take interest rates down to a record low of 0.25%. Despite coming in slightly weaker than expected, the data show that manufacturing purchasing managers remain optimistic about the health of the USA economy, and stands in contrast to last week’s relatively lackluster GDP data, which tends to be a lagging economic indicator. After both stabilized this spring, the index increased but recently took a hit with the decision of voters in the United Kingdom last month to leave the European Union.
