Manufacturing sector growth slows

The manufacturing sector grew at its slowest pace for nearly two years in June, raising fresh doubts about its ability to power the UK's economic recovery.

The Markit/CIPS Purchasing Managers' Index, where a reading of more than 50 indicates growth in overall manufacturing activity, slowed to 51.3, down from 52 in May.

Its lowest reading since September 2009 was brought about by weak domestic demand and slower growth in exports as the global economy "drifted into a softer patch" in the wake of the Japanese tsunami and eurozone debt crisis.

It had been hoped the sector could play a key part in the UK economic recovery but its growth has slowed every month since hitting a record high at the start of the year.

Rob Dobson, a senior economist at Markit, described the report as worrying and said the market had slipped closer to stagnation.

He added: "With strong headwinds already in place and austerity measures likely to put increasingly counteractive pressure on domestic and consumer demand, it looks as if manufacturing has entered a slower growth phase which could be with us for some time.

"The survey data will call into question the sector's ability to play a major role in delivering a robust and sustainable economic recovery."

The average reading for the sector over the second quarter of 2011 is the lowest since the UK pulled out of recession in 2009.

Manufacturing production levels posted a modest increase but the underlying trend was still one of moderating growth, it added.

New orders fell for their second successive month, sparking fears that the slowdown in growth will continue.

The number of new jobs created by the sector slowed sharply, sinking to a nine-month low.

But input price inflation reduced to its weakest level in one-and-a-half years, reflecting recent falls in the cost of oil and other commodities.

Howard Archer, chief economist at IHS Global Insight, said: "This is a hugely disappointing survey which fuels currently-mounting concerns over the economy.

"The manufacturing sector has come off the boil and is cooling rapidly after a decent recovery in 2010 and early 2011."