PMI report shows drop in UK automotive sector

Posted on 04 Jul 2019 and read 643 times
PMI report shows drop in UK automotive sectorThe new NatWest UK Automotive PMI report (www.rbs.com), produced jointly by NatWest and IHS Markit (www.ihsmarkit.com), is based on responses from UK automotive-sector manufacturers and benchmarked against equivalent indices for Europe and the rest of the world.

At 43.5 in May, the ‘headline seasonally adjusted’ UK Automobiles and Auto Parts PMI (a single-figure measure of developments in manufacturing conditions) registered below the crucial 50.0 no-change threshold for the second month running.

Following April’s figure of 48.9, this signalled the sharpest downturn in business conditions across the UK automotive sector for six and a half years.

The report says that — aside from a brief upturn during March, amid a “Brexit-related surge in production volumes and stockpiling” — the index has shown softer operating conditions in each month since June 2018.

"It adds that the downturn in the UK automotive sector’s output, order books and employment in the second quarter of 2019 has been “amplified by a payback from extended production schedules in March”.

Survey respondents also commented on “softer domestic demand” following production stoppages at volume manufacturers and a reversal of stock building across the supply chain; and “looking through the noise of unseasonal production shutdowns, the recent PMI figures indicate the worst period of underlying demand since late-2012”.

Export sales were especially subdued in May, with automotive-sector manufacturers pointing to the steepest drop in new orders from abroad since April 2009.

That said, comparisons of the UK Automobiles and Auto Parts PMI data against international benchmarks show that UK manufacturers have faced declines in order books of a similar scale to those seen across Europe and further afield.

In fact, the Global Automobiles and Auto Parts PMI figure for May was the lowest since February 2013 — and the weakest of all sectors monitored by the IHS Markit data.

Richard Hill, head of automotive and manufacturing at NatWest, said: “The challenge for the UK automotive sector is to chart a course through the intense industry headwinds that are so clearly evident in the report findings.

"At NatWest, we believe that new collaborative models hold the key to success, and we must accelerate efforts to collaborate across the critical elements of the auto-sector ecosystem — OEMs, supply chain, policy-makers, investment and finance communities.

"These connections will help ensure that the UK can deliver the industrial capacity, infrastructure and regulatory framework to maintain and build on its leading role in the global automotive-sector ecosystem.”

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