Report shows recovery in UK manufacturing before Brexit vote

UK manufacturers reported an increase in activity in the run-up to the EU referendum, according to the latest Markit/CIPS purchasing managers? index (PMI).

The closely watched PMI was at a five-month high in June, rising to 52.1.

Survey compiler Markit said the survey showed a rapid increase in UK manufacturing production, underpinned by an acceleration in new work. New orders rose at the quickest pace since last October, reflecting the ongoing strength of the domestic market and a marginal rise in new export business.

However, most of the data was collected before the 23 June referendum in which the UK voted to leave the European Union.

Rob Dobson, senior economist at Markit, said the figures showed that the manufacturing sector had ?started to move out of its early year sluggishness? before the referendum.

?Whether this growth recovery can be sustained will depend heavily on whether the current financial and political volatility spills over to the real economy,? he added.

Dobson went on to warn of the ?clear risk? that ongoing uncertainty will have a short-term impact on manufacturing.

?The big question is whether any negative impact from uncertainty can be partly offset by a boost to exports resulting from the fall in the pound,? he concluded.

Manufacturers? organisation EEF welcomed the confirmation that conditions were turning around for UK manufacturing, but warned that ?any positive soundings in the past couple of months have been thrown up in the air by last week?s referendum decision?.

Lee Hopley, chief economist at EEF, said:

?The pick-up in output and sales components and the relative strength of the manufacturing PMIs across most of Europe would, in other circumstances, have reinforced our view that the worst of the downturn seen in the previous 18 months was now behind us. But with economic and political uncertainty ramping up in the wake of the referendum, all today?s data is showing us is what we could have won.

?The future path of demand, investment and employment across the sector is very unclear and while we continue to see fundamental strengths across many parts of industry, short-term data movements are nigh-on impossible to predict.?