[LONDON] British factory growth slipped in December as new orders came in at the slowest pace in five months, according to a survey that showed scant sign of better fortunes for manufacturing this year after a tough 2015.
Monday's Markit/CIPS manufacturing purchasing managers' index (PMI) dropped to a three-month low of 51.9 from 52.5 in November, at the bottom end of expectations in a Reuters poll that forecast a reading of 52.7.
Manufacturing failed to contribute to Britain's economic growth through the first three quarters of 2015, with the much larger services industry instead driving the recovery.
While an October surge in the factory PMI raised brief hopes of a manufacturing rebound in the fourth quarter, survey compiler Markit said a marginal positive contribution from the sector the now best that could be hoped for. "The UK manufacturing sector ended 2015 on a disappointing note, with its rate of growth slowing further from October's recent high back down towards the stagnation mark," Rob Dobson, senior economist at Markit, said.
"Although this would be an improvement on the second and third quarters, it does also suggest that manufacturing output over 2015 as a whole may be below the level achieved in 2014." The new business index fell to its lowest level since July, while Markit's gauge of exports orders - which had improved in the previous three months - slipped back.
The PMI also showed factory gate prices fell for a fourth successive month. "If this ongoing mix of subdued growth and weak price pressures remains prevalent elsewhere in the economy, the Bank of England will likely continue to push any potential rate increase later into 2016," Dobson said.
Economists polled by Reuters expect the BoE to hike interest rates from their record low of 0.5 per cent around the middle of next year.