UK factory slump deepens as PMI drops to lowest since 2013

London: A downturn in UK manufacturing worsened in June as a gauge for the industry dropped to the lowest level since February 2013.

IHS Markit’s Purchasing Managers Index for the sector showed a back-to-back contraction for the first time in more than six years. Production and new business returned the worst readings for almost seven years, with companies citing Brexit uncertainty and soft global growth as reasons behind the slowdown.

The figures underscore the UK. economy’s hangover from high levels of stockpiling in the first quarter, when companies rushed to build up inventories to smooth any disruption around the nation’s original March 29 Brexit date.

With Brexit now delayed, the question for policymakers is whether firms will start running down these stocks, or maintain them until the new October deadline.

“There will be a need for substantial improvement in economic conditions at home and overseas, alongside reductions in both Brexit and domestic political uncertainties, if manufacturing is to see a sustained revival in the coming quarters,” said Rob Dobson, director at IHS Markit.

In a separate report, the Bank of England said on Monday that the annual growth of consumer credit increase the least in more than five years in May.