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| Poor UK manufacturing survey adds to triple-dip recession fears | Poor UK manufacturing survey adds to triple-dip recession fears |
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| Britain's manufacturing sector shrank unexpectedly in February, adding to fears that the UK could slide into its third recession in four years. | Britain's manufacturing sector shrank unexpectedly in February, adding to fears that the UK could slide into its third recession in four years. |
| The survey of manufacturing from CIPS/Markit – which provides the first economic indicator of the month – is a fresh blow for the embattled chancellor, George Osborne, who will face heavy criticism if the UK economy drops into an unprecedented triple-dip recession this quarter. | |
| Factory output and new orders both fell over the month, making it likely the sector will drag on economic growth over the first three months of the year. The news sent the pound tumbling against the dollar, dropping to $1.5044, its lowest rate in more than two-and-a-half years. | Factory output and new orders both fell over the month, making it likely the sector will drag on economic growth over the first three months of the year. The news sent the pound tumbling against the dollar, dropping to $1.5044, its lowest rate in more than two-and-a-half years. |
| Economists had expected the sector to grow in February, but the purchasing mangers' index (PMI) slid to 47.9, pushing it below the 50-mark that separates expansion from contraction and dashing hopes of a rise to 51. At the same time, Markit revised January's index slightly down to 50.5. | Economists had expected the sector to grow in February, but the purchasing mangers' index (PMI) slid to 47.9, pushing it below the 50-mark that separates expansion from contraction and dashing hopes of a rise to 51. At the same time, Markit revised January's index slightly down to 50.5. |
| New orders dropped for the second month running and at a faster pace than in January, with companies blaming tough market conditions at home and abroad. That prompted them to shed staff at the fastest rate in more than three years, with big companies making the deepest cuts. | New orders dropped for the second month running and at a faster pace than in January, with companies blaming tough market conditions at home and abroad. That prompted them to shed staff at the fastest rate in more than three years, with big companies making the deepest cuts. |
| The UK economy shrank by 0.3% in the last three months of 2012, dragged down by falling factory output. That put it on the road to another technical recession – defined as two consecutive quarters of contraction. | The UK economy shrank by 0.3% in the last three months of 2012, dragged down by falling factory output. That put it on the road to another technical recession – defined as two consecutive quarters of contraction. |
| Chris Williamson, chief economist at Markit, said the survey results were "a big surprise and represent a major setback to hopes that the UK economy can return to growth in the first quarter and avoid a triple-dip". | Chris Williamson, chief economist at Markit, said the survey results were "a big surprise and represent a major setback to hopes that the UK economy can return to growth in the first quarter and avoid a triple-dip". |
| But he said there was still some hope the UK could avoid another downturn. "First, the bad weather at the end of January looks to have had a knock-on effect to production and orders in February via disrupted deliveries. Second, the Chinese new year holidays are having an increasingly disruptive impact on global trade flows as each year goes by and appear to have had a stronger than usual effect in February. Third, the weaker pound may help exporters in coming months," explained Williamson. | But he said there was still some hope the UK could avoid another downturn. "First, the bad weather at the end of January looks to have had a knock-on effect to production and orders in February via disrupted deliveries. Second, the Chinese new year holidays are having an increasingly disruptive impact on global trade flows as each year goes by and appear to have had a stronger than usual effect in February. Third, the weaker pound may help exporters in coming months," explained Williamson. |
| Manufacturing output also fell across the eurozone where a PMI of 47.9 was recorded in February, a slightly smaller fall than January's 47.8. While Germany returned to growth, there was a sharp deterioration in Italy and France suffered yet another contraction. | Manufacturing output also fell across the eurozone where a PMI of 47.9 was recorded in February, a slightly smaller fall than January's 47.8. While Germany returned to growth, there was a sharp deterioration in Italy and France suffered yet another contraction. |