Why a retail slump doesn’t look good for UK manufacturing

July 27, 2016

AndyB - CBI retail survey bad news for manufacturers

Britain’s high street stores aren’t the only ones who’ll be concerned by fairly dismal retail sales figures from the Confederation of British Industry on Wednesday. It’s a cause of worry for manufacturers too.

The CBI said retail sales suffered the sharpest fall in sales in four years after last month’s vote to leave the European Union. In turn, retailers cut orders with suppliers by the most since the 2008-09 financial crisis.

As the chart above shows, this fits pretty closesly with the monthly Markit/CIPS UK Manufacturing PMI reading for consumer goods producers – which account for around a third of total British manufacturers, according to official data.

Last week’s one-off “flash” PMIs showed overall British factory activity contracted at the fastest pace since February 2013 during July. The latest CBI survey suggests things may get worse for a good chunk of British manufacturing.

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