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UK manufacturing PMI drops to a minimum in 7 years

UNITED STATES, WASHINGTON (OBSERVATORY) — Business activity in the UK manufacturing sector fell at the fastest pace in seven years in August, research firm IHS Markit said.

Pound decreased after the publication of data. By 16:13 Moscow time, the pound was down 0.74% to $ 1.2066. The British currency remains under pressure due to concerns about the possibility of Brexit without a deal.

The Purchasing Managers Index (PMI) in the country’s manufacturing sector in August fell from 48 points in July to 47.4 points, reaching its lowest level since July 2012. A

figure below 50 points reflects a decrease in activity, and above, an increase in activity.

The decline in production activity occurred amid weakening demand. In August, the sharpest decline in new orders for 85 months was observed.

New export orders have fallen at the fastest pace in more than seven years.

“High levels of economic and political uncertainty, along with continued tensions in world trade, reduced the performance of British manufacturers in August,” said Rob Dobson, director of IHS Markit.

Study participants reported that some EU customers are moving supply chains from the UK in connection with Brexit.

The level of business optimism has fallen to a minimum since at least July 2012. The

decline in employment in the UK manufacturing sector in August was one of the highest over the past six and a half years.

UK GDP in the second quarter unexpectedly declined for the first time in more than six years.

A further contraction in the current quarter would mean a recession.

The head of the Bank of England, Mark Carney, in August noted an increase in the likelihood of a “tough” secession from the European Union, recognizing the need to soften monetary policy under a similar scenario.

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