As Reuters tells us that the UK is heading for a recession because our Manufacturing PMI has hit a staggering 47 (anything under 50 is contraction). They cite multiple concerns like
“July saw the UK manufacturing sector suffocating under the choke-hold of slower global economic growth, political uncertainty and the unwinding of earlier Brexit stockpiling activity,”
Very true. Never mind the fact that we have already consumed the benefit of that stockpiling.
So, now that we know the UK is doomed and it's mainly the fault of Brexit. What is the PMI for manufacturing for that paragon of manufacturing powerhouses, Germany?
43.2
In fact Germany has not been over 50 since October 2018. 9 months of contraction. 3 months is a recession.
So what are the reasons for German manufacturing shrinkage?
as new export orders dropped the most since April 2009 amid falling sales to China and a slump in the automotive sector.
Or, in other words, the same malaise that is gripping the UK. It is a world disease and Brexit is not really having that much of an effect on it.
Where Brexit will bite, dramatically, is in German car sales to the UK. What is one of the biggest impacts to German PMI? The automotive sector.
So what was said about the impact of Brexit on the automotive sector, back in January when the slump was less and German PMI was higher (very close to 50)?
In 2016, Britain was the largest single export market for German manufacturers, who sold 800,000 new cars there, or 20 percent of their overall global exports.
There is an interesting little part about that article. It says that 80% of UK manufactured cars were exported to the EU, then it says that EU car manufacturers don't export to the US and China because they have factories there. They try to make the case that the UK would lose manufacturing jobs because we would not be able to export to the EU. Forgetting that the biggest export market for the EU would no longer be able to easily export to the UK, forcing them to manufacture there, in the UK.
Today I read that the BMW CEO was entreating Boris to "find a deal" to avoid disaster. Well given the PMI figures for Germany he's barking up the wrong gum tree. He should be in Brussels telling them to get on the phone to the UK and "find a deal" that the UK parliament can accept. Sharpish. Before Germany winds up in Depression.
Finding the truth of the situation in the whole Brexit situation is a nightmare. Everyone who doesn't want to leave is trying to stuff the genie back in the bottle and trying to scare the whole world into helping them. They need to face facts, the genie is out, it was the EU that rubbed the lamp by telling Cameron to go take a jump in the lake and now they are going to have to live with it.
After all, if our PMI for manufacturing was at 43.2, our press would be having palpitations. Never mind the fact that Manufacturing is only a small part of our economy which is mainly service based. Just imagine what it is doing to Germany who's economy is still very heavily manufacturing...
