UK factory output fell at its fastest rate since 2012 in December as a tepid global economy slowed demand and businesses further reduced stocks of good as they had stockpiled in the case of a no-deal Brexit in previous months.
The broader headline PMI, which combines gauges of output, employment and orders, fell to 47.5 from 48.9 – revised up only slightly from a preliminary reading of 47.4. Above 50.0 indicates industry expansion, below indicates contraction.
Data last month showed the UK economic growth slowed to an annual 1.1% in the third quarter of 2019, it has not been below this since 2010.
Uncertainty over Brexit disheartened business investment in the UK throughout 2019, and the threat of a no-deal Brexit made output volatile as firms repeatedly built up, then reduced, stocks of raw materials as potential deadlines were extended.
Now the UK looks on course to leave the European Union on January 31st with a transition deal that avoids new tariffs until the end of 2020, giving Johnson a short window to negotiate a longer-term trade deal with the EU.
Despite poor date, GBP/EUR has done very little during today’s trading session, with markets still trading just below the 1.18’s.