Manufacturers hit by fall in export orders

Manufacturing continued to shrink last month, fuelling fears that Britain is struggling to escape the double-dip recession.

The latest Markit/Cips Purchasing Managers' Index snapshot of the sector came in at 48.6 (any figure less than 50 indicates contraction). The reading was better than May's figure, which showed the sector plummeting at the fastest rate since the 2009 recession, but nevertheless pointed to a second successive month of falling output from Britain's manufacturers. "The sector's downturn has eased a little, but [it] does not change the overall picture of continued industrial decline," said Samuel Tombs of Capital Economics. He added that manufacturing was likely to continue to drag down GDP in the second quarter of this year, extending the downturn deep into 2012.

The Markit manufacturing survey showed that much of the activity in May which did take place came from running down old orders; incoming new business contracted for the third successive month. Export orders were hit, as overseas demand also declined for the third month in a row.

The Bank of England is expected to introduce a fresh round of monetary stimulus for the economy this week. The Bank's Governor, Sir Mervyn King, said last week that the UK economic outlook has worsened over the past six weeks.