Manufacturing sector shrunk in June as industry fears prolonged slowdown

Jake Cordell
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Marching turned to stumbling for the UK's makers in June
Marching turned to stumbling for the UK's makers in June (Source: Getty)

The UK's manufacturing sector started life after the EU referendum on the back foot, official statistics released this morning have confirmed.

The industry shrunk by 0.3 per cent in June, according to figures from the Office for National Statistics (ONS) showing the slowdown started in the days before the UK's historic vote to untangle itself from the EU.

The fall was marginally worse than expectations and puts a damper on an overall strong second quarter for UK manufacturing, where growth over the three months to June - at 1.8 per cent - was its strongest in six years.

Ruth Gregory of Capital Economics said: "After a torrid 2015, today’s figures confirmed that the UK manufacturing sector put in a strong performance in the second quarter as a whole. However, with production activity almost entirely driven by a 2.3 per cent monthly surge in growth in April, this suggests that growth slowed to a standstill even before the referendum".

The state of manufacturing in the UK is worrying. In light of the decision of the UK to leave the European Union, the negative trend in manufacturing could easily take a turn for the worse," said Kay Daniel Neufeld of City A.M.

Manufacturers' body, the EEF, said the slide back into contraction in June was probably the start of a more prolonged downturn for at least the rest of 2016.

"Clearly, indicators of sentiment post referendum suggest that we've hit the high point for manufacturing this year," said Lee Hopley, chief economist at EEF.

"Amdist the wavering levels of confidence, however, we should take away some positive news. Firstly, that manufacturing entered this period of uncertainty from a relatively strong stance and the weaker exchange rate could yet bring benefits on the exports side."

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