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Britain’s Factory Output Drops Again

Recent figures show that the UK’s factory output has dropped again. This worrying trend suggests that the country’s manufacturing industry is now in recession, according to some sources.

A look across Europe shows that several other countries reported similar drops. What are the reasons behind this and what does it all mean?

What Do the Figures Show?

The headline figure here is that the UK’s Factory PMI has fallen to 47.4 in August, 2019. This is the lowest level it has been at since July of 2012. On top of that, it is the also fourth successive month that it has been on the slide.

This news comes from the widely-followed purchasing managers’ index. It sat at 48 in July but dropped down to 47.4 the following month. If we look at this in terms of quarters, we can see that the UK economy dropped 0.2% in the second quarter of 2019 when compared to the first quarter of the year.

The fact that this index is now under 50 is a crucial point. What this means is that there are now more companies that are contracting, in terms of their output, than those that are growing. Interestingly, a recent poll of economists had shown that a small rise to 48.4 had been predicted. So this setback was clearly unexpected.

This news adds to the current, uncertain economic situation in the UK. With the Pound continuing to suffer against the US Dollar, there are a number of signs that a recession could be on the way.

What Are the Reasons for This?

One of the big issues reported for this continuing is that of EU-based customers appearing to cool on the idea of using British manufacturers. This is said to be mainly due to fears of a no-deal Brexit happening later this year and leaving EU customers with added complications if they want to work with British companies.

It is also worth noting that manufacturing levels across other parts of Europe have been suffering slumps in the last month or so too. The biggest casualty has been Germany. Here, the PMI actually rose a little, to 43.5, in August. However, this is the eighth month in a row that the country has been below that all-important 50 score.

That said, the increase in August means that Germany at least moved away from the seven-year low that was recorded there in July. Meanwhile, Ireland, Austria, Spain and Italy have all noted falls in this respect too.

Global trade tensions an on-going political uncertainty are a couple of other factors that have been put forward as possible reasons for these figures. There is no doubt that economic issues like these are part of the reason why international commercial debt collection and recession fears are now in many people’s minds.

France was one nation that reported an improvement in their factory output. In this case, their figures climbed from July’s reading of 49.7 to 51.1 in August, crossing the crucial 50 barrier in the process.

It is clear that a lot of eyes will be on next month’s PMI update. Will the downward trend continue or will there an up-turn?