Rising oil costs hit growth figures

 

Growth in the UK's manufacturing was weaker than expected in February as rising oil costs drove up prices at their fastest rate in more than 19 years.

The Markit/CIPS survey, where a reading above 50 represents growth, showed the sector grew at 51.2, down from 52 the previous month and weaker than City expectations of 52.1.

Manufacturers battled the sharpest monthly rise in input prices for more than 19 years and the second sharpest in the survey's history after three months of declines.

Rising oil prices, which have been driven as high as 109 US dollars a barrel in recent week amid tensions over Iran's nuclear programme, pushed up the cost of chemicals, metals, plastic and transport for businesses.

The rising prices threaten to derail the sector's recent rebound amid signs that new work from domestic and overseas clients stagnated.

Rob Dobson, senior economist at Markit, said: "The latest PMI survey brought the headwinds faced by manufacturers into sharper focus.

"Cost inflation also resurfaced, picking up sharply on the back of high oil prices and associated increases in the costs of chemicals, energy and transportation.

"If this combination of rising costs and weak demand persists, sustaining output growth and job creation will become increasingly difficult."

The prices manufacturers charge for their goods rose at the quickest pace for five months.

But this was not as fast as the rise in input costs, suggesting that their profit margins are in danger of being squeezed as they struggle to hike prices amid weak demand.

The manufacturing sector declined in the final quarter of 2011, dealing a blow to Chancellor George Osborne's plans to rebalance the economy through increasing exports.

However, it returned to growth in January amid rising orders from emerging markets and falling costs.

Today's surveys revealed that new orders were unchanged month-on-month as the UK market was hit by reduced levels of business from the public sector, which is being squeezed by the Government's austerity measures.

The eurozone crisis brought about a fall in orders from the continent, which offset rises from Asia and the US.

Despite the slowdown in the rate of growth, the number of people employed by the sector increased for the second month in a row, and although the increase was moderate it was still the quickest pace since June.

CIPS chief executive David Noble said: "The manufacturing sector consolidated on January's sharp increase in growth, but the return of rising oil prices and lacklustre demand is a cause of some trepidation.

"Whilst the tentative boost in employment is a sign of increased confidence in the sector, this can be attributed to efforts to fulfil the growth in new orders seen at the beginning of the year."

PA

PROMOTED VIDEO
Life and Style
food + drink
Arts and Entertainment
musicBand's first new record for 20 years has some tough acts to follow
News
Shoppers in Covent Garden, London, celebrate after they were the first to buy the iPhone 6, released yesterday
tech
News
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvSeries 5 opening episode attracts lowest ratings since drama began
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments