The extent of the challenges facing the UK manufacturing sector was revealed by a bleak survey on Friday morning. The IHS Markit/CIPS UK Manufacturing purchasing managers’ index fell to a four-month low of 52 in February from 52.6 in January.
Growth of new orders stagnated in a slowing UK market while export orders dropped again. Purchasing activity increased to stockpile raw materials amid Brexit uncertainties while job losses hit their highest level since February 2013, along with plummeting business optimism – confidence in the outlook for business hit its lowest level since records began in 1992.
The number of EU nationals moving to the UK hit a 10-year low in the year to September 2018, according to data from the Office for National Statistics (ONS). Overall, long-term immigration fell to its lowest level since 2014, but non-EU migration hit its highest level since 2004. A rise in students from China and India helped push the number of non-EU migrants to more than 250,000. Just under 100,000 Chinese students were given visas to study in the UK, and a further 20,000 from India.
Matthew Fell, Chief UK Policy Director at the Confederation of British Industry, said: “These figures confirm fewer EU workers are coming to the UK, exacerbating labour and skills shortages across many sectors, from farm labourers to engineers. Businesses cannot succeed without access to skills and labour.” He called on the government to establish ways for firms to hire staff earning less than £30,000 from within the EU and to lengthen temporary visas to help ease the recruitment difficulties UK firms are facing.
UK shop prices rose at their fastest pace in six years in February. The jump was caused by retailers passing on the higher import costs caused by sterling’s depreciation since the EU referendum. A higher oil price has also been adding to input costs. The BRC-Nielsen Shop Price Index showed price inflation was 0.7% in February, substantially up on January’s 0.4% and the highest level since March 2013.
Consumer confidence is holding up surprisingly well despite the uncertainty around Brexit, according to a closely-watched market indicator. The GfK Consumer Confidence index, which is followed by the Bank of England and other key policymakers, hit a level of -13 in February, a slight improvement from the -14 in January, but still lower than before the EU referendum.
Consumer confidence is a vital indicator because around two thirds of national output is related to household spending, which can plummet if confidence falls. The results contrasted with data from an EU survey that showed economic sentiment in the UK falling sharply in February to its lowest level in six years.
The European Commission’s monthly economic sentiment indicator for Britain dropped from 103.7 in January to 99.2 in February, the worst reading since 2013 and below the EU’s 1990-2017 average of 100. Outside the UK and across the eurozone the same survey showed sentiment remaining surprisingly upbeat, with a reading of 106.3, despite data suggesting the region’s economy is slowing. UK house price growth continued on its subdued trajectory in February. The Nationwide House Price Index showed house prices fell 0.1% in February compared to a 0.2% rise in January. The annual rate of price growth increased to 0.4%, however, compared to the 0.1% recorded in January.
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