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Manufacturing growth slowing, says EEF UK manufacturing growth at 14-month low, PMI survey finds
(33 minutes later)
Growth in the UK's manufacturing sector has slowed, according to a survey by the EEF trade association. Growth in the manufacturing sector has slowed, with both new orders and output increasing less rapidly than before, two surveys have suggested.
The manufacturing body, which conducted the quarterly survey between 30 July and 20 August, said members had reported a slowdown in both orders and output. The Markit/CIPS UK Manufacturing Purchasing Managers' Index (PMI) edged down in August to 52.5 from 54.8 in July, its lowest reading for 14 months.
Members also reported their first drop in export orders since early 2013. However, the sector still grew as a PMI figure over 50 indicates expansion.
The EEF now expects the manufacturing sector to grow by 3.3% in 2014, down from its previous forecast of 3.5%. A separate survey from the EEF trade body, conducted between 30 July and 20 August, also found growth had slowed.
"UK manufacturing cannot insulate itself from global market conditions and this is clearly shown in the dip in output," said Tom Lawton, head of manufacturing at accountancy firm BDO, which helped with the survey. Sustaining growth
Despite the slowdown, the rate of growth forecast for 2014 would still mark the sector's fastest expansion since 2010 when output grew by 4.2%. Markit said the slowdown was broad based with new jobs, export orders and new business all weakening.
Despite the slowdown, Markit said that the pace of expansion in UK manufacturing still remained slightly above its long-term average.
"Sustaining the upturn is still a positive in itself," said Markit senior economist Rob Dobson.
However, he warned the slowdown meant the sector would provide a smaller boost to the UK's overall rate of growth this year.
Global uncertainty weighs
The EEF said that, because of the recent slowdown, it now expected the manufacturing sector to grow by 3.3% in 2014, down from its previous forecast of 3.5%.
"UK manufacturing cannot insulate itself from global market conditions and this is clearly shown in the dip in output," said Tom Lawton, head of manufacturing at accountancy firm BDO, which helped with the EEF survey.
Despite the slowdown, the rate of growth forecast for 2014 by the EEF would still mark the sector's fastest expansion since 2010 when output grew by 4.2%.
The EEF also said that manufacturing firms were still expecting a positive third quarter, and expected to increase their spending for a 17th consecutive quarter.The EEF also said that manufacturing firms were still expecting a positive third quarter, and expected to increase their spending for a 17th consecutive quarter.
"We're seeing manufacturers continue to recruit for skilled jobs and increase their plans to invest in the coming year - exactly what the UK economy still needs for balanced growth," said Lee Hopley, the EEF's chief economist. Jeremy Cook, chief economist at the currency exchange company, World First, said the surveys pointed to a "broad slowdown" in the sector.
"While the worst days of the recession are definitely behind us, this survey also suggests that the finest days of the recovery are too. Gains are going to be a lot more hard-fought," he added.