New figures reveal shock fall in manufacturing
Friday 01 June 2012
The UK manufacturing sector took a sudden and sharp turn for the worse today after new figures revealed a shock contraction in production.
The latest Markit/CIPS survey, where a reading above 50 represents growth, fell to 45.9 in May from 50.2 the previous month, well below City hopes for a figure just below 50.
It is the second-steepest fall in the survey's 20-year history and came as new orders dropped at the fastest pace since March 2009.
Markit said the collapse reflected not just the crisis in the eurozone but the increasing weakness of the UK domestic market, with overall order books shrinking at a faster rate than export orders.
It found that manufacturers were struggling to replace orders from Europe with work elsewhere, such as the US and Asia.
Barring a sharp turnaround this month, manufacturing output could fall by as much as 1% in the second quarter, dashing hopes that the UK will make a quick exit from recession.
CIPS chief executive David Noble said: "The harsh realities of the weak global economy and sluggish domestic demand are bearing down on UK manufacturing.
"This may prove to be a blip, but there is a long way to go before the manufacturing sector recovers fully from the global financial crisis. The sector could well become a drag on the UK economy as it seeks a return to better health."
Job losses were reported for the first time in five months during May, while CIPS also highlighted the increasing non-replacement of leavers.
The only bright spot for economy-watchers came from an easing in inflationary pressures, with the rates of increase in input costs and selling prices both slowing over the month.
Andrew Goodwin, senior economic adviser to the Ernst & Young Item Club, said today's figures were desperately disappointing, with worrying echoes of the collapse in activity in 2008.
He added: "The recent trend had been one of a gradual slowdown in activity, but today's figures show that the problems are on another level altogether.
"Clearly the escalation of the eurozone crisis is having a very damaging effect on confidence, not just in the eurozone itself but also in the UK."
CIPS said the decline in output may have been sharper had it not been for a marked reduction in backlogs in work, as companies diverted spare capacity towards completing existing contracts.
More than a third of surveyed companies reported a decline in incoming new orders during May, with some doing so in anticipation of price reductions in the coming months.
- 1 Scientists create transparent mouse complete with see-through organs
- 2 Pope Francis issues top 10 tips for happiness
- 3 Disney heiress Abigail disowns her share of family profits in West Bank company
- 4 Israel's propaganda machine is finally starting to misfire
- 5 Amazonian Indian tribe filmed making contact with Brazil village in rare video footage
Mystery of the Siberian holes at the end of the world 'solved': Scientists offer explanation
Pope Francis issues top 10 tips for happiness
Kenny Ireland dead: Benidorm actor dies aged 68
Justin Bieber posts Instagram photo of Orlando Bloom crying after Ibiza fight 'over Miranda Kerr'
Putin v Obama: Russian deputy prime minister mocks president with catty pictures on Twitter
Land for gas: Merkel and Putin discussed secret deal could end Ukraine crisis
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Boozy, ignorant, intolerant, but very polite – Britain as others see us
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
- < Previous
- Next >
iJobs Money & Business
£300 - £350 per day: Orgtel: Financial Analyst, Forecasting, Halifax, Banking,...
£500 per day: Orgtel: Business Architect - Banking - Bristol - £500 per day A...
£200 - £500 per day + competitive: Orgtel: I am currently working on a large p...
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...