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UK manufacturing 'in the doldrums' leaves growth lopsided
[LONDON] UK manufacturing grew less than forecast in March, underscoring the uneven nature of the economy as the global slowdown takes its toll on exports.
A Purchasing Managers' Index increased to 51 from 50.8 in February, Markit Economics said in London today. The median of estimates in a Bloomberg News survey was for a reading of 51.2.
That meant the average for the first quarter of the year equaled the lowest since 2013, Markit said. The index is barely above the 50 level that divides expansion from contraction.
"The UK manufacturing sector remained in the doldrums," said Rob Dobson, an economist at Markit.
"Although March saw modest improvements in the trends for production and new orders, industry is still hovering close to the stagnation mark and will struggle to make a meaningful contribution to the next set of GDP growth figures."
The weakness may underscore doubts about the sustainability of the UK's economic expansion. Official data on Thursday showed consumers continue to drive growth amid a darkening outlook for the world economy and uncertainty in the run-up to the June referendum on Britain's European Union membership.
Mr Dobson said the domestic market continued to be the main source of new business for manufacturers. A gauge of export orders dropped for a third month.
An index of employment also fell for a third consecutive month, with makers of investment goods seeing the sharpest cuts. The data suggest hiring at small and medium-sized companies failed to offset job shedding at larger manufacturers, Markit said.
While the pound had its worst quarter since 2009 on a trade-weighted basis, Markit said the drop probably wouldn't help exporters. Sterling fell 0.3 per cent to $1.4326 at 9:54 am London time, almost 3 per cent weaker than at the end of 2015.
"The exchange rate is likely to cause as many issues on the cost side through higher import prices as it aids for demand," Mr Dobson said. "This could apply an unwelcome additional strain to manufacturers' margins.