17 October 2002 | Liam O'Brien
Manufacturing growth has slowed to a crawl despite continuing strong gains in services, according to the latest figures.
The CIPS/Reuters purchasing managers' index shows that in September, manufacturing barely grew for the second month in a row.
The index - where 50 signifies no change on the previous month - fell from 51 in August to 50.2 in September, the weakest growth in six months.
Andrew Potter, economist at NTC Research, said: "Weakness in manufacturing is coming from producing capital equipment. The only strength in the sector is in manufacturing consumer goods.
"Even here manufacturers are sustaining growth at the expense of profit margins."
Jobs were cut again in September, with the index falling to 46.5 from 47.1. In the services sector, which grew overall, the index fell to 47 from 47.3.
The service sector's strong showing was borne out by the CBI's latest Distributive Trades Survey (DTS) of 20,000 retailers, which showed a pick-up in September sales growth.
Asked to compare sales with a year ago, 41 per cent said sales were up, and 23 per cent said they were down. The balance of plus 18 per cent compares with plus five in August.
Sales growth continues to hold up in those sectors closely related to the housing market. Stores selling furniture, carpets and durable household goods all reported strong growth compared with a year ago.
Despite the rise, however, the CBI sounded a note of caution.
Alastair Eperon, chairman of its DTS panel, said: "The September rally in sales growth is heartening but it doesn't reflect an underlying slowdown experienced by many retailers."