Most U.S. firms think Brexit's impact will be negligible, according to a new report.
A majority of U.S. firms see only a negligible impact from Britain's vote last week to leave the European Union, according to an industry report released on Friday. The Institute for Supply Management (ISM) said that 61 percent of businesses it surveyed saw a negligible impact compared to 6 percent who saw a negative impact for the remainder of the year. According to the report, 27 percent saw a slightly negative impact while a further 4 percent forecast a slightly positive impact. There was little difference between non-manufacturing and manufacturing firms. For those forecasting a negative impact, they mostly believed it would be a result of changes in foreign exchange rates stemming from the 'Brexit' vote.
Yahoo Finance reports:
When asked to project what could be the net financial impact of Brexit on their organization, a majority believed Brexit would have a negligible impact on their firm. About one in three surveyed thought their firm would be negatively, or slightly negatively, impacted. Only a small proportion (less than 10 percent) felt their business would be positively, or at least slightly positively, impacted by Brexit.
Supply management executives were asked if their firms were likely to respond to the vote by employing various tactics to slim down or downwardly manage their workforce. Overwhelmingly, respondents reported that they would not, or probably would not, take such measures. Only a small proportion of panelists reported that their firms would, or probably would, hire fewer workers or more frequently utilize short-term labor contracts. Even fewer indicated they might make more use of third-party contingent labor. Less than 10 percent thought their firm might or would reduce the size of their workforce.
The Institute for Supply Management on Friday said its index of manufacturing activity rose to 53.2 in June from 51.3 in May. A reading above 50 indicates that factory activity is expanding while a reading below 50 signals contraction. The ISM factory gauge fell to 50 last September and remained in contractionary territory for the next five months, turning the corner into expansion only in March, where it has stayed for the past four months. “We’re on a pretty good trend. It’s not robust...but it’s firming up,” said Bradley Holcomb, who directs the survey. He also said the survey’s results did not account for news of Brexit, since most of the data was collected before the referendum was held.