Most purchasing executives at American factories and service producers expect little impact on their operations and staffing levels this year after the U.K. voted to leave the European Union, a sign any fallout on the domestic economy will be limited.
Sixty-one percent of those surveyed by the Institute for Supply Management expected a ‘negligible’ financial impact on their business due to Brexit, while 27 percent expected a ‘slightly negative’ outcome. Most of those polled by the Tempe, Arizona-based group from June 25 to June 29 indicated they would probably not pare headcounts as a result of the vote, and only a small share of panelists said they would hire fewer employees.
“The impact is thought to be very negligible across the large majority” of purchasing managers surveyed, Thomas Derry, chief executive officer of ISM, said in a Bloomberg Television interview. While the primary concern was the strength of the dollar, most businesses showed “a relatively muted reaction” in terms of changes to their investment and employment, he said.
The survey of the group’s members was conducted after the U.K. electorate voted in a 52-48 majority to withdraw from the EU.
Purchasing managers in both industries expected that any net negative financial impact would stem from changes in the value of the dollar, followed by global demand.
Eighty-one percent of purchasing managers said Brexit would have a “negligible” impact on capital investment for the rest of 2016, while 13 percent said the effect would be somewhat negative.
Employment plans this year are seen mostly staying intact. Sixty percent of factory and service purchasing managers said it wouldn’t cause them to reduce hiring, and 65 percent reported they wouldn’t even resort to using more short-term staff. One percent said they would cut their labor force and another 8 percent said they probably would, ISM said.