It has been clear for a while that the latest manufacturing data was going to be bad. But there’s Star Wars: The Phantom Menace bad, and there’s multiple Razzie award-winning worst film of all time nominee Kirk Cameron’s Saving Christmas bad. (Unfortunately I’ve seen it. It’s mostly two blokes in a car talking about God and Father Christmas and managing to make Jar Jar Binks look entertaining in the process).
The data (courtesy of the regular IHS Markit/CIPS Purchasing Managers Index) shows the PMIs were squarely in the Saving Christmas category. Anything above 50 represents growth. They limped in at 48, which is the worst performance the sector has put in for more than six years and well below the City’s already gloomy forecasts. Both factory output and new orders slumped.
This may just be the start of it. Chris Williamson, chief business economist at IHS Markit, pointed out that the ratio of forward-looking orders to existing inventory fell last month to its lowest level in seven years and the second lowest in a decade. At this rate, Britain’s manufacturers may not need to start stockpiling ahead of the next cliff edge at the end of October because they’re not getting enough orders to get rid of what they built up ahead.
We’ll tell you what’s true. You can form your own view.
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“Firms are reporting that export demand is falling month on month as customers around the world are losing confidence in the future of the UK market,” said trade body Make UK. Believe in Britain, say the Brexiteers. The trouble is that thanks to them the rest of the world doesn’t.
It is true that it isn’t just Brexit that’s taking a toll. The world is slowing and trade tensions remain high, despite the latest round of talks between the US and China (Donald Trump bigged them up but few outside the White House were buying it).
Nonetheless, metal bashers and other makers say that Brexit is by a distance their chief problem. The other factors just emphasise what a terribly stupid idea it is for the Tory leadership contenders to be ramping up rhetoric about cutting off the nation’s nose to spite its face with a no-deal departure.
In the political sphere, people keep saying it won’t happen because parliament won’t allow it. The bookmakers still rate it as odds against.
However, the implied probability of 33 per cent you get from the 2-1 most bookies are offering is still uncomfortably high, and the odds just keep on falling.
They have been driven down by the rhetoric Boris Johnson and Jeremy Hunt have indulged in of late. Businesses are choosing to steer clear of the UK as a result of it, while companies on these shores are donning their tin hats and formulating plans to swing the axe should the worst happen.
1/10 No deal, no tariffs
The government has announced that it would slash almost all tariffs in the event of a no-deal Brexit. Notable exceptions include cars and meat, which will see tariffs in place to protect British farmers
Getty
2/10 Fingerprint payment
NatWest is trialling a new bank card that will allow people to touch their hand to the card when paying rather than typing in a PIN number. The card will work by recognising the user’s fingerprint
NatWest/PA Wire
3/10 Mahabis bust
High-end slipper retailer Mahabis has gone into administration. 2 Jan 2019
Mahabis
4/10 Costa Cola
Coca-Cola has paid £3.9bn for Costa Coffee. A cafe chain is a new venture for the global soft drinks giant
PA
5/10 RIP Payday Loans
A funeral procession for payday loans was held in London on September 2. The future of pay day lenders is in doubt after Wonga, Britain’s biggest, went into administration on August 30
PA
6/10 Musk irks investors and directors
Elon Musk has concluded that Tesla will remain public. Investors and company directors were angry at Musk for tweeting unexpectedly that he was considering taking Tesla private and share prices had taken a tumble in the following weeks
Getty
7/10 Jaguar warning
Iconic British car maker Jaguar Land Rover warned on July 5, 2018 that a “bad” Brexit deal could jeopardise planned investment of more than $100 billion, upping corporate pressure as the government heads into crucial talks
AFP/Getty
8/10 Spotif-IPO
Spotify traded publically for the first time on the New York Stock Exchange on Tuesday. However, the company isn’t issuing shares, but rather, shares held by Spotify’s private investors will be sold
AFP/Getty
9/10 French blue passports
The deadline to award a contract to make blue British passports after Brexit has been extended by two weeks following a request by bidder De La Rue. The move comes after anger at the announcement British passports would be produced by Franco-Dutch firm Gemalto when De La Rue’s contract ends in July.
The British firm said Gemalto was chosen only because it undercut the competition, but the UK company also admitted that it was not the cheapest choice in the tendering process.
10/10 Beast from the east economic impact
The Beast from the East wiped £4m off of Flybe’s revenues due to flight cancellations, airport closures and delays, according to the budget airline’s estimates. Flybe said it cancelled 994 flights in the three months to 31 March, compared to 372 in the same period last year.
1/10 No deal, no tariffs
The government has announced that it would slash almost all tariffs in the event of a no-deal Brexit. Notable exceptions include cars and meat, which will see tariffs in place to protect British farmers
Getty
2/10 Fingerprint payment
NatWest is trialling a new bank card that will allow people to touch their hand to the card when paying rather than typing in a PIN number. The card will work by recognising the user’s fingerprint
NatWest/PA Wire
3/10 Mahabis bust
High-end slipper retailer Mahabis has gone into administration. 2 Jan 2019
Mahabis
4/10 Costa Cola
Coca-Cola has paid £3.9bn for Costa Coffee. A cafe chain is a new venture for the global soft drinks giant
PA
5/10 RIP Payday Loans
A funeral procession for payday loans was held in London on September 2. The future of pay day lenders is in doubt after Wonga, Britain’s biggest, went into administration on August 30
PA
6/10 Musk irks investors and directors
Elon Musk has concluded that Tesla will remain public. Investors and company directors were angry at Musk for tweeting unexpectedly that he was considering taking Tesla private and share prices had taken a tumble in the following weeks
Getty
7/10 Jaguar warning
Iconic British car maker Jaguar Land Rover warned on July 5, 2018 that a “bad” Brexit deal could jeopardise planned investment of more than $100 billion, upping corporate pressure as the government heads into crucial talks
AFP/Getty
8/10 Spotif-IPO
Spotify traded publically for the first time on the New York Stock Exchange on Tuesday. However, the company isn’t issuing shares, but rather, shares held by Spotify’s private investors will be sold
AFP/Getty
9/10 French blue passports
The deadline to award a contract to make blue British passports after Brexit has been extended by two weeks following a request by bidder De La Rue. The move comes after anger at the announcement British passports would be produced by Franco-Dutch firm Gemalto when De La Rue’s contract ends in July.
The British firm said Gemalto was chosen only because it undercut the competition, but the UK company also admitted that it was not the cheapest choice in the tendering process.
10/10 Beast from the east economic impact
The Beast from the East wiped £4m off of Flybe’s revenues due to flight cancellations, airport closures and delays, according to the budget airline’s estimates. Flybe said it cancelled 994 flights in the three months to 31 March, compared to 372 in the same period last year.
Research consultancy Capital Economics has pencilled in a 0.1 per cent decline in GDP for the second quarter of the year but says this latest set of numbers heighten the downside risk.
You need two consecutive quarters of falls in GDP for it to qualify as a technical recession. If you believe the theory that parliament will act to prevent a no deal, but we nonetheless get consecutive falls in GDP, perhaps we’ll be able to call it Britain’s rhetoric recession.
Given the quality of our parliamentarians right now, and the way that “millionaire hardliners” are holding sway (as GMB general secretary Tim Roache described the situation), you’d have to be quite the optimist to rely on no deal being blocked.
Among the business community, and Britain’s manufacturers in particular, there aren’t many optimists. Sensible politicians would be ashamed. But obviously…
