| 24.5°C Belfast

UK industrial sector suffers slowdown in new orders

Activity in Britain's manufacturing industry came in shy of expectations as a slowdown in new orders sent output drifting to a three-month low.

The closely watched Markit/CIPS UK Manufacturing purchasing managers' index showed a reading of 54.3 last month, down from 56.3 in May and below economists' forecasts of 56.4.

A reading above 50 indicates growth.

The report pointed to a widespread slackening across the industry, with output and new orders climbing at "milder rates" in the consumer, intermediate and investment goods sectors.

Despite the slowdown, the average rate for the second quarter still reached a three-year high at 55.9.

Rob Dobson, senior economist at IHS Markit, said the industry pushed through the political uncertainty surrounding the Brexit vote and the general election to deliver further growth.

He said: "The main factor driving the broad slowdown in June was a steep easing in the rate of increase in new order intakes.

Weekly Business Digest

Margaret Canning’s selection of the must-read business stories straight to your inbox every Tuesday morning

This field is required

"New business rose at the weakest pace for nearly a year and growth was down sharply from April's near three-year high.

"This slowdown was largely centred on the domestic market, where increased business uncertainty appears to have led to some delays in placing new contracts.

"Export orders remained disappointingly lacklustre despite the ongoing competitiveness boost of the weak sterling exchange rate."

New orders were struggling to keep pace both at home and abroad, with growth of new export work slipping to a five-month low.

The choppy political environment was also hanging over the industry, sending positive sentiment to its lowest level for seven months. However, nearly 48% of manufacturers still expect output to be higher by this time next year thanks to increased investment, new product launches and lift from new business.

Howard Archer, chief economic adviser to EY ITEM Club, said the slowdown will add to concerns over the industry.

Increased prices for capital goods and big-ticket consumer durable goods, diminished consumer purchasing power and likely increasing business concerns and uncertainties over the economy and political situation look likely to hamper manufacturers.

On the positive side - despite the disappointing June export orders - the overall substantial weakening of the pound and improved global demand should buoy UK manufacturers competing in foreign markets."