Manufacturing job losses 'at six-year high'

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UK manufacturers are cutting jobs at the fastest pace for six years with confidence in the sector hit by Brexit uncertainty, according to a closely-watched survey.

The research, by IHS Markit/CIPS, also found that companies stockpiled raw materials at a record pace last month.

While firms' output continued to grow, this came as they built up stocks of finished goods ahead of Brexit.

It also said growth in new orders slowed to "near stagnation".

The Purchasing Managers' Index (PMI) for the manufacturing sector slipped to 52.0 in February, from 52.8 the month before. A figure above 50 indicates expansion.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply (CIPS), which helped to produce the survey, said: "The UK manufacturing sector continues to suffer the slings and arrows of outrageous fortune as the harsh realities of Brexit uncertainty, challenges in the global economy and a weak pound affected confidence, jobs and overall activity.

"Though the index number remained steady above the 50 mark, the underlying reasons for its steadfastness were less encouraging.

"Firms said they were stockpiling raw materials and finished goods to keep their businesses viable in the coming months."

The IHS Markit/CIPS survey found that of those companies who offered a reason for the build-up of stocks, 70% attributed it to Brexit.

"Stocks of purchases also rose at the fastest rate since the survey started in 1992 as the fear of customs delays, tariffs and a 'no-deal' scenario felt real for many," said Mr Brock.

"The sector's sickness was also visible in employment levels with the steepest job losses in six years and with business optimism at its lowest levels since 2012, firms are unlikely to start hiring any time soon."

Eurozone weakness

A number of business groups have warned that the uncertainty surrounding the terms of the UK's exit from the EU is damaging businesses.

On Monday, the aerospace and defence trade group ADS, which represents some of the largest companies operating in the UK, said the risk of a no-deal Brexit was turning into a "full-blown economic crisis".

The manufacturing sector has also been hit by a slowdown in economies outside the UK.

The equivalent PMI survey for the eurozone indicated the sector contracted last month for the first time in more than five years, with the activity index reading falling to 49.3.

The weak performance was put down to trade war worries and slowing global growth, as well as increased political uncertainty, including Brexit.

Thomas Pugh, UK economist at Capital Economics, said it was clear that the UK's manufacturing sector was being "hit hard by the combination of Brexit and the global slowdown".

"As such, the [PMI] survey suggests that the manufacturing sector will provide little support to the [UK] economy in Q1, even though there are some signs of activity being bolstered by Brexit preparations."