You are here

Key UK manufacturing gauge tumbles six days before election

brit.jpg
British manufacturing growth suffered its sharpest slowdown in more than two years last month, a survey showed on Thursday, adding to worries about the economic recovery six days before a national election.

[LONDON] British manufacturing growth suffered its sharpest slowdown in more than two years last month, a survey showed on Thursday, adding to worries about the economic recovery six days before a national election.

Financial data company Markit said its monthly Purchasing Managers' Index for manufacturing dropped to a seven-month low of 51.9 in April from a downwardly revised 54.0 in March, the biggest one-month fall since February 2013.

The figure is still just above the 50-mark that divides growth from contraction, but lower than all the forecasts in a Reuters poll of 31 economists, which had forecast a modest pick-up in the pace of expansion.

"Today's UK PMI delivered less-than-positive news on the health of the manufacturing sector," said Rob Dobson, an economist at Markit. "Any signs of rebalancing the economy towards manufacturing and exports remain frustratingly elusive."

The figures follow official figures announced earlier this week which showed that economic growth in the first quarter was its slowest since late 2012, prompting Conservative finance minister George Osborne to warn voters not to take recovery for granted.

Economists said at the time that they did not think the first-quarter numbers meant that Britain was heading into a sustained slowdown because private-sector readings such as the PMIs had shown strong growth.

Friday's weaker manufacturing survey may now prompt economists to take a more downbeat view of growth at the start of the second quarter.

Opinion polls suggest the Conservatives are more trusted on the economy than the Labour opposition, but that has not given the Conservatives a clear lead in opinion polls before next Thursday's election.

Labour seized on this week's weak data to challenge the Conservatives' claim to be the guardians of the recovery.

Although Britain's economy grew faster last year than any other major advanced economy, wages have failed to keep pace with inflation for most of Prime Minister David Cameron's five-year term, and Labour is campaigning on what it calls a cost-of-living crisis.

Markit said slower hiring, weaker production growth, declining export orders and a slide in the prices manufacturers can charge contributed to the fall in the manufacturing PMI.

The 'prices charged' component showed the most widespread price cuts since September 2009. Hiring was its weakest since June 2013, suggesting a two-year boom in the size of Britain's labour force may be coming to an end.

New export orders fell at the fastest rate since January 2013. Companies blamed the strength of sterling, which hit its highest in more than seven years against the euro in March.

The United States, Britain's second-largest export market after the eurozone, also suffered weak growth in early 2015.

REUTERS