Manufacturing output slumps to 17-month low
The Markit/CIPS UK Manufacturing purchasing managers’ index showed a reading of 53.9.
Output in Britain’s manufacturing sector slumped to a 17-month low in April as production, new business and employment growth across the industry slowed.
The Markit/CIPS UK Manufacturing purchasing managers’ index (PMI) showed a reading of 53.9, lower than the 54.9 recorded in March.
Economists were expecting a figure of 54.8.
A reading above 50 indicates growth.
Rob Dobson, director at IHS Markit, which compiles the survey, said: “The start of the second quarter saw the UK manufacturing sector lose further steam.
“The headline PMI dipped to a 17-month low as growth of production, new business and employment all slowed.
“While adverse weather was partly to blame in February and March, there are no excuses for April’s disappointing performance.”
The poor reading in part reflected a weakening in the pace of expansion of new work from abroad, the report said, with growth of new export business hitting a 10-month low.
UK PMI showed #manufacturing job creation slumping: #employment grew at the slowest rate since February of last year, with a particularly notably weakening of hiring among larger firms pic.twitter.com/3pUpsETO1h— Chris Williamson (@WilliamsonChris) May 1, 2018
Sterling tanked on the news, falling 0.5% against the dollar to 1.36 US dollars.
Against the euro, the pound was down 0.2% 1.13 euros.
Mr Dobson said that the figures, coupled with the worse-than-expected GDP reading last week, makes the prospect of an interest rate hike by the Bank of England “look increasingly remote”.
“On this footing, the sector is unlikely to see any improvement on the near-stagnant performance signalled by the opening quarter’s GDP numbers,” he added.
The data also showed that growth of output and new orders eased, while business optimism dipped to a five-month low.
The consumer goods industry saw its first job cuts since February 2017, with the rate of reduction the steepest in almost six-and-a-half years.
It comes as consumers have been hammered by Brexit-fuelled inflation, diminishing their spending power.
Mr Dobson added: “Looking ahead, the trend in manufacturing production is likely to remain subdued.
“Weak demand meant firms are seeing backlogs of work fall and stocks of unsold goods rise, limiting the need for output to rise in May.
“Business optimism has also dipped to a five-month low as concerns about Brexit, trade barriers and the overall economic climate remained widespread.”