Published: Tue, September 03, 2019
Markets | By Otis Pena

Brexit weighs on United Kingdom manufacturing as output plunges to seven-year low

Brexit weighs on United Kingdom manufacturing as output plunges to seven-year low

The Purchasing Managers' Index (PMI) for Turkey's manufacturing sector reached 48 points in August, hitting its highest level since July 2018, according to a closely monitored business survey on Monday.

China's official manufacturing PMI, released by the National Bureau of Statistics on Saturday, fell to 49.5 in August from July's reading of 49.7.

In another bright spot, the final reading for backlogs of work rose to its highest since December previous year, though it still showed a decline and some firms said operating capacity eased as a result of slower inflows of new business.

On Sunday, higher USA tariffs on about US$110 billion (S$153 billion) of Chinese imports took effect, as did Beijing's retaliatory duties on United States goods.

The sub-index for production edged down 0.2 points to 51.9 in August, signaling continuous expansion but at a slower pace, while that for new orders was down by 0.1 points to 49.7.

In one brighter spot, as it is less dependent on exports than other euro zone countries, France's economy has so far proved more impervious to a slowdown and factory activity returned to growth as manufacturers saw output and client demand pick up.

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A private gauge of China's factory activity rebounded to a five-month high in August, thanks to improved production, but the outlook remained overshadowed by shrinking foreign demand amid the intensifying U.S.

Manufacturers' output expanded at the fastest pace since March, the survey showed. The NBS said the official PMI for August came in at 49.5, down from 49.7 in July. But analysts say the depreciation is giving exporters only some modest relief as global demand remains weak.

But data indicated that improved domestic demand helped offset a further reduction in export sales. But the likelihood of a notable drop in PMI readings is limited, as consumption resilience, infrastructure investment recovery and policy support will shield the economy from any major downturn, Hua said.

"The US-China trade war is escalating and we're also seeing tensions heighten between Washington and Europe", which could cause the global economy to falter, said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities. "The subindex for stocks of purchased items fell further into negative territory, reflecting manufacturers" growing reluctance to replenish inventories.

Average input costs fell for the first time in six months amid reports of falling raw material prices, helping to ease pressures on profit margins.

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