It turns out even the UK manufacturing sector, which over recent months has staged a glorious recovery, is vulnerable to the whims of Vladimir Putin. The Purchasing Manager's Index, published this morning, fell to 52.5 in August, its lowest reading since June 2013 and well below economists' expectations of 55.
The index, published by Markit and CIPS, fell from 54.8 in July. Any figure above 50 denotes growth in the sector.
Analysts blamed geopolitics.
Rob Dobson, Markit's senior economist, said demand was unlikely to improve if tensions in Europe continued to escalate:
It is becoming increasingly evident that UK industry is not immune to the impacts of rising geopolitical and global market uncertainty, especially when they affect economic growth and business confidence in our largest trading partner the Eurozone. It is noticeable that where export orders were reported to have risen, companies mainly linked this to demand from North America, Asia and the Middle East, as opposed to our European partners
Robert Wood, chief economist at Berenberg, added:
Russia’s escalation of the conflict in Ukraine has taken a toll on the internationally exposed manufacturing sector, and that effect could yet worsen further in the coming months given recent confidence drops in the more directly exposed core European economies. These developments pose a serious downside risk to growth this year and next.
The good news was foreign demand for British-made goods rose for the 17th month in a row - orders increased from clients in the US, Canada, Asia and the Middle East. Job creation in the secotor also rose for the 16th consecutive month.
However, Dobson added that "it looks as if manufacturing will provide a lesser contribution to the UK economic growth story in the third quarter than at the start of the year".