Jubilee holidays and World Cup dent UK growth in June

17 July 2002
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18 July 2002 | Robin Parker

Companies benefited from massive consumer spending ahead of the Golden Jubilee weekend and the football World Cup, but demand slumped during the festivities, according to new figures.

Purchasers in the manufacturing sector said the decline in demand caused slower growth in June, according to the monthly purchasing managers' index from CIPS and NTC Research.

Separate data from National Statistics (NS) shows that manufacturing output grew for the second consecutive month in May, for the first time since autumn 2000.

June marked the end of two months of heightened consumer demand in the build-up to the Jubilee and World Cup. The new orders index fell from 57.2 to 52.7, closer to the 50 that signals no change on the month before.

Growth of new business in the services sector also suffered as a result of the festivities.

Although almost a quarter of firms said incoming work had grown as a result of improved working conditions, the Jubilee weekend and the World Cup were blamed for the slowest rise in demand for four months.

Construction activity continued to grow, but more slowly than in previous months.

Prices rose across the board, with manufacturers in particular hit by a particularly strong increase in the cost of raw materials, after a fall in May.

Andrew Potter, an analyst at NTC Research, said the consumer market appeared to be stabilising after an unexpectedly strong period, "although prices paid by purchasers are getting higher".

In the US, tariffs on European Union steel goods have been blamed for nearly doubling the cost of hot rolled steel since the end of last year. The government's Commerce Department is weighing up pleas from more than 1,200 firms asking for their suppliers to be exempt.

The findings contrast with NS figures for May, which found that the UK exported £500 million of goods to the US, shrinking the trade deficit to its lowest level in nearly three years.

SMjul2002

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