Activity in British industry slowed in February

British industryActivity in British industry slowed in February for the second consecutive month, while the pressure to increase prices decreased, indicating that the effects of the weakening pound seems to fade. The Purchasing Managers Index (PMI) of private company Markit recorded a decline of 55.7 points to 54.6 points, below economists’ expectations for value of 55.8 points.

The depreciation of the British pound after the Brexit referendum had mixed effects on the industry. The goods become cheaper for foreign buyers, but costs for manufacturers increased.

The effect of the weaker exchange rate on prices began to fade providing relief with regard to increased inflationary pressures. The big question is whether a steady growth will be maintained or will weaken in the coming months.

According to the report output prices remain near record level registered in January. The weak pound has encouraged demand from Europe, USA and Asia.

Growth in employment in the UK and the recovery of exports suggest that the slowdown in industry will be modest. Nearly half of the surveyed companies expect production to be higher in a year, and only 6% predicted decline.