BUSINESS confidence continued its downward trajectory in the manufacturing sector but the pace slowed following the UK vote to exit the European Union, according to new data.
The latest quarterly Credit Managers’ Index (CMI) showed confidence in manufacturing fell for the second consecutive quarter, but while the pace of decline slowed.
The decline in manufacturing is a growing concern coupled with the drop in the construction sector output. However confidence in the services sector – the UK’s dominant sector – has improved slightly, arresting the decline of the index overall.
The headline index (including both manufacturing and services) stood at 56.1 – a fall of 0.5 points on the previous quarter. Manufacturing fell by 1.8 to 57.2 while services improved by 0.06 to 55.63.
The CMI is important because it gauges nationwide levels of credit being sought and granted by credit managers across the UK and acts as a primary indicator of actual levels of business being conducted. It consistently maps the FTSE All Share Index and the EU Economic Sentiment Indicator.
“It will be interesting to see what effect the Bank of England’s cut in the base interest rate to 0.25% and further quantitative easing will have on this volatility and confidence,” says Philip King, CEO of the CICM.
There is a mixed picture emerging of the UK economy in the wake of the referendum decision to leave the EU. This week figures from the Office for National Statistics showed that total UK unemployment fell to 1.64 million between April and June in the run-up to the Brexit vote. The unemployment rate remains at 4.9%, a fall of 52,000 for the quarter.
The number of people on the claiming benefits in July, the first month since the UK’s vote to leave the EU, was 763,600, down 8,600 from June.
In other good news retail sales grew by 5.9% in July compared to the previous year helped by warmer weather and a weaker pound, the ONS found.