Manufacturing expected to continue to drag overall economic growth down

The pace of growth of new orders slowed to 52.2, its lowest since September 2014

Click to follow
The Independent Online

New manufacturing orders grew at their slowest pace in nearly a year in July, according to the latest survey snapshot of the sector, suggesting that manufacturing will continue to drag on overall economic growth.

The Markit/CIPS manufacturing purchasing managers’ index (PMI) rose to 51.9 last month, up from 51.4 in June but well below the 54.3 average recorded since April 2013.

The pace of growth of new orders slowed to 52.2, its lowest since September 2014.

Rob Dobson, an economist at Markit, said: “Although a tick higher in the headline PMI breaks the decelerating trend in UK manufacturing, growth in the sector remains near-stagnant and suggests that the sector is continuing to act as a drag on the economy.”

Analysts said the strong value of sterling was an impediment to exports.

Paul Hollingsworth of Capital Economics said: “Looking ahead, though, weak overseas demand and an uncompetitive exchange rate look set to hold back the sector’s recovery in the near term. Accordingly, the onus remains on the dominant services sector to keep the recovery chugging along.” Sterling has risen 10 per cent against the euro this year.

The first official estimate of GDP growth in the second quarter was released by the Office for National Statistics last week, showing that manufacturing output fell by 0.3 per cent, following a similar sized fall in the first quarter.