Weakest manufacturing activity data for 21 months

News Article - 08 July 2011
Category: Business

New UK manufacturing orders fell for a second month running last month, according to the Markit/CIPS Purchasing Managers' Index (PMI).

Consequently, overall manufacturing growth fell back for a fifth consecutive month, leading to the weakest performance since September 2009.

However, official UK forecasts from the Office for Budget Responsibility continue to indicate 1.7 per cent growth in 2011 and 2.5 per cent the following year.

Hopes for economic recovery have been largely underpinned on success in the nation's manufacturing sector, but this latest PMI data has sparked fresh concerns amongst economic experts.

"Hopes that a sustained rebalancing of an economy towards the industrial sector would help to offset the weakness of consumer sector are fading fast," said Jonathan Loynes of Capital Economics.

A major concern is that the UK is slipping behind the manufacturing growth of the eurozone, despite its own widening debt crisis.

Manufacturing PMI data for the eurozone released at the same time indicated a reading of 52, with even higher individual figures for Germany, Austria, France and the Netherlands.

Stephen Tetlow, chief executive of the Institution of Mechanical Engineers, said: "These figures are deeply worrying. A prospering and growing manufacturing sector is vital to the UK economy.

"We are now, once again, falling behind our international competitors with both Germany and the eurozone as a whole showing stronger growth than the UK."

Ironically, the manufacturing sector prospered better in the recession off the back of recovering global demand and the weakened British economy which improved the attraction of British exports.

However, recent months have indicated a decline in manufacturing on a global scale with many companies choosing not to re-stock depleted areas.

In order to meet the precise needs and technicalities of a manufacturing organisation, a growing number of businesses are installing manufacturing business systems to improve their control over the manufacturing process.

In an effort to maximise profitability across the board, from stock and works orders to sales and purchasing, businesses have the accurate, accessible information needed to maximise margins.

Article keywords: Manufacturing performance, Markit/CIPS Purchasing Managers’ Index, PMI, Office for Budget Responsibility, Jonathan Loynes, Capital Economics, eurozone, Stephen Tetlow, Institution of Mechanical Engineers, British exports, manufacturing business systems

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