June 2, 2019 / 11:20 PM / 2 months ago

UK manufacturing growth weakens as EU customers stay away: survey

FILE PHOTO: A worker irons the leather on a seat at Bentley's manufacturing facility in Crewe, Britain October 15, 2018. Picture taken October 15, 2018. REUTERS/Darren Staples/File Photo

LONDON (Reuters) - British manufacturing growth has weakened over the past couple of months as European companies decided to divert supply chains away from the world’s fifth-biggest economy while the Brexit crisis rumbled on, an industry survey showed on Monday.

The Make UK manufacturing organization and accountants BDO said output and orders continued to grow but at a slower rate than in the early months of 2019.

Britain’s economy picked up early this year, helped by the biggest rise in factory output in 20 years as companies raced to stockpile goods to avoid disruption to supply chains in the run-up to the original March 29 Brexit deadline.

But the latest quarterly Make UK survey showed a weakening of hiring and investment intentions.

“Earlier this year there was clear evidence that industry was on steroids as companies stockpiled. Underneath, however, there is now growing evidence of European companies abandoning UK supply chains,” Make UK chief executive Stephen Phipson said.

He added that Asian customers were also balking at the discord surrounding the outlook for British trade terms.

Make UK expects British factory output to grow just 0.2% this year and 0.8% in 2020, weaker than the rest of the economy.

The Make UK/BDO survey covered 344 companies between May 1 and May 22.

The closely-watched IHS Markit/CIPS monthly survey of British factories is due at 0830 GMT. Economists polled by Reuters expect it to show manufacturing growth cooled somewhat in May.

Reporting by Andy Bruce, editing by David Milliken

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