U.K. Factory Downturn Was Less Severe Than Feared in November

(Bloomberg) -- U.K. manufacturing shrank less sharply than initially estimated in November, even as political uncertainty hung over the sector.

IHS Markit said Monday that its Purchasing Managers Index for the industry fell to 48.9, higher than an earlier estimate of 48.3.

The reading was nevertheless below the 50 level that indicates stagnation for a seventh straight month, as political uncertainty over Brexit and the looming general election weigh on businesses.

November's figures are the first to reflect Markit's new reporting process, where a flash estimate, based on 85% of responses, is followed by a final reading.

Key Insights

• Measures of output, new orders and employment all decline
  
• “Efforts to reverse high stock holdings also contributed to the contraction,” as firms reacted to the latest delay in the Brexit process
  
• Inventories of finished goods fell at the fastest pace in 2 1/2 years, marking a reversal of the trend before the Oct. 31 Brexit deadline was postponed
  
• New export business saw one of the sharpest rates of declines over the past seven years, while levels of outstanding business also fell
  

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Markit is due to publish similar indexes for the U.K.'s construction and dominant services sector later this week
An initial flash estimate put the reading for services at 48.6, and a composite measure for the whole economy at 48.5 -- the lowest since July 2016

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