British manufacturers shrug off Brexit

August’s manufacturing rebound is one of the strongest post-referendum signals for Britain’s economy.

Employees work on Brompton folding bicycles in the assembly area inside a London factory. Picture: Simon Dawson/Bloomberg.

British manufacturing activity rebounded in August following a July slump, according to a survey released on Thursday, one of the strongest signals yet that the UK economy is bearing up well following voters’ shock decision to leave the European Union.

Financial information firm IHS Markit said its closely watched purchasing managers index for the manufacturing sector rose to 53.3 in August from 48.3 in July, the joint-largest month-to-month jump in 25 years.

Markit said firms reported a revival in sales and orders in August after the initial Brexit shock subsided. Exports were fueled by a weak pound, which has fallen by around 11 per cent against the dollar since the June 23 vote.

Sterling jumped after the survey was released as the figures were better than expected. Economists polled by The Wall Street Journal had expected the August figure to remain at 49.5. Sterling rose almost 1 per cent to hit a one-month high of 0.8403 against the euro.

“The Brexit brakes are off,” said David Noble, group chief executive of the Chartered Institute of Procurement & Supply, which helps Markit compile the survey.

The findings add to a growing body of evidence that the UK economy has largely shrugged off the referendum result, at least for now.

Consumer confidence recovered in August after slumping in July, a survey found, while retail sales surged over the summer. Data from the housing market has been weaker, with the Bank of England reporting a slide in mortgage approvals in July and lender Nationwide PLC saying few properties are coming to market.

The BoE nevertheless cut its benchmark interest rate to a new low in August, fearing the Brexit vote will have broad repercussions for the UK economy. Officials fret the uncertainty surrounding the UK’s future trading relations with the EU will stunt business investment and restrain growth.

Dow Jones newswires