Hopes that the economy will rebound strongly from recession have been dealt a severe blow by figures showing that the manufacturing sector shrank at its fastest pace in three years in July.
Activity in Britain’s largest single industry contracted more rapidly than at any point since May 2009, according to the closely-watched purchasing managers index (PMI), raising the prospect of more money printing by the Bank of England today.
Manufacturing PMI fell from 48.4 in June to 45.4, where anything below 50 indicates contraction. The result was far weaker than analysts’ expectations of 48.6.
“A slump on this scale was not expected,” Ross Walker, UK economist at Royal Bank of Scotland, said.
Manufacturing activity remains significantly below its pre-crisis peak in 2008 despite the competitive boost provided by sterling’s devaluation.
The Government has pinned much of its plan for the UK’s regeneration on manufacturing exports, but the strategy is so far failing to deliver.
The sector’s weakness “again casts doubts on the UK’s prospects”, James Knightley at ING said. The economy shrank by 0.7pc in the three months to June and is expected to bounce back strongly this quarter, but the PMIs have renewed doubts.
Alan Clarke at Scotiabank said the poor outcome reinforced “our confidence that the Bank will accelerate the pace of quantitative easing” when it unveils its decision today.
Most economists believe rates will be held at 0.5pc and QE left unchanged at £375bn.Manufacturing activity was weak across the board. New orders fell from 46.7 to 42.4 and new export orders from 47.8 to 41.1.
According to Markit, which compiled the survey data with the Chartered Institute of Purchasing & Supply, “the ongoing weakness of the eurozone remained the principal drag on new export orders, although there were also some reports of a decline in new business received from Asia”.
Lee Hopley, chief economist at EEF, the manufacturers organisation, said: “There isn’t much positive news to take, with demand being hammered by persistent weakening in eurozone markets and slower growth in other parts of the world.
The weak PMI raises question marks over whether we will see a bounce back in the near future.”
telegraph.co.uk
Activity in Britain’s largest single industry contracted more rapidly than at any point since May 2009, according to the closely-watched purchasing managers index (PMI), raising the prospect of more money printing by the Bank of England today.
Manufacturing PMI fell from 48.4 in June to 45.4, where anything below 50 indicates contraction. The result was far weaker than analysts’ expectations of 48.6.
“A slump on this scale was not expected,” Ross Walker, UK economist at Royal Bank of Scotland, said.
Manufacturing activity remains significantly below its pre-crisis peak in 2008 despite the competitive boost provided by sterling’s devaluation.
The Government has pinned much of its plan for the UK’s regeneration on manufacturing exports, but the strategy is so far failing to deliver.
The sector’s weakness “again casts doubts on the UK’s prospects”, James Knightley at ING said. The economy shrank by 0.7pc in the three months to June and is expected to bounce back strongly this quarter, but the PMIs have renewed doubts.
Alan Clarke at Scotiabank said the poor outcome reinforced “our confidence that the Bank will accelerate the pace of quantitative easing” when it unveils its decision today.
Most economists believe rates will be held at 0.5pc and QE left unchanged at £375bn.Manufacturing activity was weak across the board. New orders fell from 46.7 to 42.4 and new export orders from 47.8 to 41.1.
According to Markit, which compiled the survey data with the Chartered Institute of Purchasing & Supply, “the ongoing weakness of the eurozone remained the principal drag on new export orders, although there were also some reports of a decline in new business received from Asia”.
Lee Hopley, chief economist at EEF, the manufacturers organisation, said: “There isn’t much positive news to take, with demand being hammered by persistent weakening in eurozone markets and slower growth in other parts of the world.
The weak PMI raises question marks over whether we will see a bounce back in the near future.”
telegraph.co.uk
No comments:
Post a Comment