Further demise for manufacturing sector
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The manufacturing sector in the UK has contracted to its lowest level seen in three years, new figures show.
The Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) finds that the downturn in the manufacturing sector has ‘gathered pace’ at the start of the third quarter of the year.
For July, the PMI hit 45.4, down from a revised reading of 48.4 in June and the worst reading recorded since May 2009.
Any reading of above 50.0 represents growth, however a positive figure has not been seen since April. Since then the index dropped to 45.9 in May before rising back up to 48.6 in June and falling back again with the latest findings.
The report blames the dip on contraction in both output and new orders during July as businesses faced up to diluted demand from both domestic and export customers.
Further statistics show that the level of new export business fell for the fourth month in a row, and currently sliding at the fastest rate seen since February 2009.
Rob Dobson, senior economist at Markit, says that the UK manufacturing sector hit ‘turbulent waters’ in the past month.
He adds, ‘Coming on the back of a 1.4 per cent decline in manufacturing production in the second quarter, it looks like the sector remains a major drag on the overall economy.’
In examining the dip in new export orders, the report finds that the Eurozone market is still the ‘principal drag’, combined with a decline in new business received from Asia.
David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, comments, ‘A perfect storm of wet weather and weak confidence in the UK has combined with global economic drift to engulf the manufacturing sector in July.
‘A slight increase in employment is the thinnest of silver linings for the sector, along with lower input prices and further growth in the consumer goods industry. However, the sharp decline in production of both investment goods and intermediate goods is an ominous sign.’