UK manufacturing slowdown continues
Baku, November 2 (AZERTAC). Plans to rebalance the economy towards manufacturing appear to be on the rocks after figures showed activity in the sector contracted for the sixth straight month in October.
The CIPS/Markit Purchasing Managers` Index (PMI) fell to 47.5 from a downwardly revised 48.1 in September, dipping further below the 50 mark which separates growth from contraction.
The downturn worsened as companies received fewer orders and costs rose at a faster pace than in September, forcing firms to cut jobs and scale back investment plans.
News that manufacturers are continuing to cut production will sound alarm bells in the Treasury and the Department for Business, Innovation and Skills, which have argued for a shift in policy towards creating the conditions that favour industrial production.
The Treasury is also concerned that a weaker manufacturing sector will drag the economy back into the third recession in four years when official figures for GDP in the fourth quarter are published early next year.
The UK has just emerged from its second recession since the financial crash following a 1% rise in national income in the third quarter. But economists put most of the rise down to one-off factors and many have predicted another period of contraction as the slowdown in global growth and government austerity measures take their toll.
But manufacturers cut production for a fourth month in a row and new orders fell at a faster rate than in September as export demand dwindled, the PMI data showed.
Bank of England policymakers have cautioned that the strong growth from the third quarter was unlikely to be repeated.
In a worrying sign for the central bankers, companies` costs rose at the fastest pace since March. Firms also increased their prices at a much slower rate, squeezing profit margins.
Other news in this section
