UK manufacturing unexpectedly shrinks in April, reaches three-year low

[LONDON] British manufacturing output unexpectedly fell in April, reaching a three-year low, according to a survey that suggested the economy is slowing before the country's referendum on whether to remain a member of the European Union.

The Markit/CIPS manufacturing Purchasing Managers' Index (PMI) dropped to 49.2 in April from 50.7 in March - the first time since March 2013 it has fallen below the 50 mark that separates expansion from contraction.

It was also short of the lowest forecast in a Reuters poll of economists, which called for a slight decline, to 50.5. The median forecast was for a rise to 51.2.

As well as uncertainty about the June 23 EU referendum, factories faced a weaker global economy and a slowdown in the oil and gas industry, a major customer for British manufacturers.

"With this backdrop unlikely to change in the coming months, the second quarter is likely to remain a bleak landscape for (the) industry," Rob Dobson, senior economist at survey compilers Markit, said.

Britain's economic growth slowed to 0.4 per cent in the first quarter from 0.6 per cent in late 2015, propped up by the services sector.

Activity is unlikely to recover before the referendum, which the Bank of England has said is weighing on investment.

Markit's index of manufacturing output fell to 50.1 from 52.9, its lowest since March 2013. New orders were down at 50.4 in April from 51.9 in March, matching February's three-year low.

New export orders contracted for the fourth straight month in April as the global economy continued to slow, Markit said.

A measure of employment in the manufacturing sector was also below the 50 mark for its fourth straight month.

REUTERS