This article is from the source 'independent' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.independent.co.uk/news/business/news/manufacturing-industry-hit-by-weaker-exports-9703800.html

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Manufacturing industry hit by weaker exports Worries over recovery as manufacturing slows
(about 14 hours later)
Manufacturing delivered bad news today as the latest survey of activity in the sector unexpectedly dropped to a 14-month low because of weaker exports and slowing new orders. Manufacturing is growing at its weakest rate in 14 months as firms feel the effects of flagging exports and slowing orders, according to the latest survey snapshot of the sector.
The Markit/CIPS Purchasing Managers’ Index posted a reading of 52.5 for August, still above the 50 mark that separates expansion from contraction, but down sharply from 55.4 in July and below analysts’ expectations of 55. The Markit/Cips Purchasing Managers’ Index yesterday posted a reading of 52.5 for August. That was above the 50 mark which separates expansion from contraction, but down sharply from 55.4 in July and below analysts’ expectations of 55.
Growth in new export orders slowed to a five-month low with David Noble of CIPS highlighting a “backdrop of market uncertainty and increasing geo-political tensions”. Growth in new export orders slowed to a five-month low with David Noble of Cips highlighting a “backdrop of market uncertainty and increasing geo-political tensions”.
The manufacturer’s organisation EEF today downgraded its 2014 growth forecast from 3.4 per cent to 3.3 per cent, citing a slowdown in orders and output in the three months to August. Rob Dobson of Markit said that the sector’s weakness was most pronounced in  European markets.
The main manufacturing survey index for the eurozone also hit a 13-month low in August, according to Markit, ahead of Thursday’s meeting of the European Central Bank board where analysts expect the bank to prepare the ground for its own monetary stimulus programme. “It is noticeable that where export orders were reported to have risen, companies mainly linked this to demand from North America, Asia and the Middle East, as opposed to our European partners,” he said.
Data from the Bank of England also pointed to a continued slowdown of the UK mortgage market following April’s regulatory rule tightening, with the number of approvals for new home purchase in July declining to 66,559, from 67,196 in June. Approvals are now running 13% below January’s peak. That downbeat message was echoed by the EEF manufacturer’s organisation yesterday, which downgraded its 2014 growth forecast from  3.4 per cent to 3.3 per cent, citing a slowdown in orders and output in the third quarter.
“All in all, the data is pointing to a slowing in the rate of economic growth, which plays into the hands of the more dovish members of the bank of England’s monetary policy committee,” said James Knightley of ING. He added that it was now looking more likely that the central bank would impose its first interest rate rise next February, rather than this autumn. Separately, data from the Bank of England pointed to a continued slowdown in the UK mortgage market following the introduction of the Mortgage Market Review in April. The number of approvals for new home purchases in July declined to 66,559, down from 67,196 in June. Approvals are now running 13 per cent below January’s peak.
Net lending to firms inched up by £1.2 billion in July, but small business lending contracted again, declining by £400 million. Total household borrowing rose by £3.4 billion. “The data is pointing to a slowing in the rate of economic growth, which plays into the hands of the more-dovish members of the Bank of England’s Monetary Policy Committee,” James Knightley of ING said. He added it was now looking more likely the Bank will impose its first interest rate rise next February, rather than this autumn.
Another manufacturing shock came from the Far East this morning with the HSBC/Markit PMI survey for China dropping to 50.2 in August, only just in positive territory. Analysts said the dip could result in more policy easing from the authorities in Beijing. “The UK’s expansion is in danger of losing its balance” said Martin Beck at the EY Item Club. “In early 2014, investment and exports offered solid support to GDP growth and reduced the economy’s reliance on consumer spending and the housing sector. But there is now concern that the UK is in danger of repeating the problems of the past.”
Net lending to firms inched up by £1.2bn in July, but small-business lending contracted again, declining by £400m in the month. Total net household borrowing rose by £3.4bn. Consumer credit – which includes credit-card debt – was up by £300m.
The eurozone’s main manufacturing survey index also hit a 13-month low in August, according to Markit, ahead of Thursday’s meeting of the European Central Bank board, where analysts expect it to prepare the ground for a monetary-stimulus programme.
Another manufacturing shock came from the Far East with the HSBC/Markit PMI survey for China dropping to 50.2 in August, only barely in positive territory. Analysts said the dip reflected both cooling foreign and domestic demand and could result in more policy easing from the authorities in Beijing.
“If we now start to see a serious challenge to growth, the pressure to do more will intensify,” said Louis Kuijs of RBS.