UK manufacturing at 26 month low
The UK manufacturing sector slumped to a 26 month low in August following a sharp decline in export orders.
According to the Markit/Cips manufacturing purchasing managers' index (PMI), figures fell to just 49 in August. Any level below 50 implies contraction.
The report, which was based on a survey of purchasing executives at more than 600 firms, showed that new export business fell at its fastest rate since May 2009. New orders and employment also declined.
"The second half of 2011 has so far seen the UK manufacturing sector, once the pivotal cog in the economic recovery, switch into reverse gear," said Rob Dobson, senior economist at Markit and author of the Markit/CIPS Manufacturing PMI. "August saw production fall for the first time since May 2009 on the back of the sharpest deterioration in new order inflows for two and a half years. A slight drop in employment also suggests manufacturers are increasingly cautious in their outlook and seeking to cut costs where possible."
Dobson maintained that with austerity measures being ramped up in the UK and abroad, any near term improvement in demand was unlikely.
Stephen Tetlow (pictured), chief executive of the Institution of Mechanical Engineers (IMechE), also voiced concerns over the figures and noted that the government must do more to help UK businesses. He said: "This is deeply worrying news for British manufacturers, meaning we are getting further and further away from the rebalanced economy that the government, and the public at large, are calling for.
"To reverse thirty years of neglect by successive governments is no easy task, but the Coalition needs to urgently reform this country's tax and lending regime to turn the UK into a world leading destination for manufacturing investment, as well as bring our crumbling infrastructure into the 21st Century. The UK needs to be the place of choice to attract international investment, not just an option."
A recent survey of 1,000 UK manufacturers by the IMechE, which represents more than 98,000 engineers across the world, showed over half think the Government's manufacturing strategy is failing, with just 12% saying the Government is performing well. More than 80% of the general public wanted to see the UK's manufacturing sector grow as a proportion of GDP.
