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UK manufacturing growth slows to a three-month low UK manufacturing growth falls to three-month low
(about 2 hours later)
Growth in the UK’s manufacturing sector slowed at the end of 2014, raising further doubts about the government’s success in rebalancing the economy away from property, services and shopping.Growth in the UK’s manufacturing sector slowed at the end of 2014, raising further doubts about the government’s success in rebalancing the economy away from property, services and shopping.
Manufacturing activity, which accounts for around 10% of economic output, fell to a three-month low in December, according to the widely watched CIPS/Markit survey of purchasing managers.Manufacturing activity, which accounts for around 10% of economic output, fell to a three-month low in December, according to the widely watched CIPS/Markit survey of purchasing managers.
The headline index fell to 52.5 in December, down from 53.3 in October and November. Anything over 50 is counted as expansion.The headline index fell to 52.5 in December, down from 53.3 in October and November. Anything over 50 is counted as expansion.
Although manufacturing activity has now increased for 22 straight months in a row, the slowdown is a blow to government hopes of boosting British exports, a key plank of a rebalancing drive that is supported by the three mainstream political parties.Although manufacturing activity has now increased for 22 straight months in a row, the slowdown is a blow to government hopes of boosting British exports, a key plank of a rebalancing drive that is supported by the three mainstream political parties.
Manufacturing businesses continued to win new orders, but largely as a result of domestic demand, rather than export orders. Many manufacturing companies were hiring new staff to clear backlogs of orders and employment in the sector has increased for 20 months in a row.Manufacturing businesses continued to win new orders, but largely as a result of domestic demand, rather than export orders. Many manufacturing companies were hiring new staff to clear backlogs of orders and employment in the sector has increased for 20 months in a row.
Companies told CIPS/Markit that demand from North America and the Middle East was improving, while the picture for the eurozone was mixed, with some businesses reporting new orders and others recording a decline.Companies told CIPS/Markit that demand from North America and the Middle East was improving, while the picture for the eurozone was mixed, with some businesses reporting new orders and others recording a decline.
A separate survey showed that manufacturing industry in the eurozone was hardly growing. The headline index was just in growth territory: it rose to 50.6 in December compared to 50.1 in November.A separate survey showed that manufacturing industry in the eurozone was hardly growing. The headline index was just in growth territory: it rose to 50.6 in December compared to 50.1 in November.
Rob Dobson, senior economist at Markit: “The latest survey provides further evidence of the ongoing slowdown in the UK manufacturing sector, with output and new order growth easing to their second-weakest rates during the past year-and-a-half. Despite this end of year tapering, the sector still performed well over 2014 as a whole, with growth averaging at its highest since 2010.” Rob Dobson, senior economist at Markit, said: “The latest survey provides further evidence of the ongoing slowdown in the UK manufacturing sector, with output and new order growth easing to their second-weakest rates during the past year and a half. Despite this end-of-year tapering, the sector still performed well over 2014 as a whole, with growth averaging at its highest since 2010.
“The positives to come out of the December readings are the continued growth, further solid increases to workforce numbers, a supportive domestic market that is driving new contract wins and the broad-base of the upturn across the consumer, intermediate and investment goods industries. The main weak spot remains exports, with overseas new order inflows stagnating amid weaker economic growth in key markets and the ongoing lethargy of the euro area.” “The positives to come out of the December readings are the continued growth, further solid increases to workforce numbers, a supportive domestic market that is driving new contract wins and the broad base of the upturn across the consumer, intermediate and investment goods industries. The main weak spot remains exports, with overseas new order inflows stagnating amid weaker economic growth in key markets and the ongoing lethargy of the euro area.”
Sterling dropped against the dollar to $1.5502, from 1.5585 in the minutes following the publication of the survey. Sterling dropped against the dollar to $1.5502 from $1.5585 in the minutes following the publication of the survey.
James Knightley at ING Bank described the manufacturing data as disappointing: “The long hoped for economic rebalancing story is not playing out as envisaged.” He expects that manufacturing will continue to shrink as an overall proportion of the UK economy, given the relative strength in the service sector. James Knightley at ING Bank described the manufacturing data as disappointing: “The long-hoped-for economic rebalancing story is not playing out as envisaged.” He expects that manufacturing will continue to shrink as an overall proportion of the UK economy, given the relative strength in the service sector.