27 April 2015

UK manufacturing growth slows in April.

By PRW Staff
UK manufacturing growth slowed down “markedly” in April, leading to fears the sector is running out of steam after the recent recovery and the possibility of cuts in production.
The latest Markit/CIPS UK Manufacturing Purchasing Manager’s Index (PMI) came in at 51.9 in April, a seven-month low. While this is still above the neutral 50.0 mark it is down on March’s reading of 54.0.
Jobs creation in the sector was the slowest it had been for two years, Markit reported. According to the research firm, the slowdown in the rate of output ran alongside weaker growth in incoming new business, which was led by a fall in the volume of new work from overseas. Firms reported the domestic market was showing signs of strength, which led to growth in total new orders. However the strength of sterling against the euro was knocking the competitiveness of UK firms looking to do business on the Continent. Consumer goods led the way in terms of output and new orders, Markit’s research found, while the rate of output and new orders growth in the intermediate goods sector fell back into contraction.
Rob Dobson, senior economist at Markit, said: “Coming on the back of weaker-than-expected GDP numbers on Tuesday and only six days before the general election, today’s UK PMI delivered less than positive news on the health of the manufacturing sector. “Rates of expansion in production and order books both slowed sharply in April, meaning manufacturing is again unlikely to provide much of a boost to broader economic growth. This keeps the emphasis for maintaining the recovery highly reliant on the service sector.” Dobson said growth remains largely consumer-led, with the strong performance of the consumer goods sector in stark contrast with other sectors. “Companies that supply manufactured inputs to other firms reported a return to contraction, suggesting other firms are planning to cut production,” he added. Meanwhile a CBI survey reported that domestic orders increased for the seventh quarter running, while export orders were broadly flat. “Domestic orders are expected to rise at a faster pace next quarter, but export orders are set to remain broadly flat with manufacturers less optimistic about their export prospects for the year ahead,” the employers' organisation said.
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