Belfast Telegraph

Friday 25 July 2014

Signs of hope for manufacturing after poor start to year

A 'glimmer of hope' has emerged for the UK's struggling manufacturers after new figures suggested the downturn in the sector could be coming to an end.

Output and new orders picked up for the first time since January, according to the latest Markit/CIPS purchasing managers' index.

The headline reading of 49.8 for April was just below the 50 level which separates growth from contraction, up from a low of 47.9 in February and 48.3 in March.

It is the latest encouraging sign for the UK economy after gross domestic product figures last week showed the country avoided a triple-dip recession with growth of 0.3% in the first quarter.

While the headline reading of GDP masked the fact that production and manufacturing was still significantly weaker than its pre-recession peak in 2008, today's figures provide signs that the sector is getting back on its feet.

Levels of production and new orders rose slightly after contracting in the prior two months, with output growing in some areas and contraction easing back in others.

Samuel Tombs, an economist at consultancy Capital Economics, said there was "a glimmer of hope that the sector's recession might be coming to an end", although he cautioned that the improvement came from very weak levels.

Export orders rose, boosted by increased sales to North America, the Middle East, Latin America and Australia, though demand from the euro area remained "lacklustre".

Manufacturing job losses were recorded for the third straight month in April but the overall rate was less than in the previous two, according to the data.

Rob Dobson, of survey compilers Markit, welcomed signs that the sector was "stabilising" after a poor start to the year:

"Manufacturers report that the domestic market is just about holding its head above water, but was still a key cause of disappointingly weak demand, while a solid improvement in export orders was the real surprise."

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