UK manufacturing activity stalls

1 June 2008
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02 June 2008 | Paul Snell

The growth in manufacturing activity stalled in May, as the volume of new orders declined at its fastest rate this year.

According to the latest CIPS/NTC Purchasing Managers' Index for manufacturing for May, activity in the sector recorded 50, indicating stagnation in the sector. This is the first time the index has not posted a figure above 50 since July 2005.

In addition the level of new orders was 48.3, a faster rate of decline than the 49.4 figure posted in April. The fall in orders, which has been getting increasingly worse since January, was attributed to the unwillingness of clients to commit to new contracts in the current economic climate.

However, export demand grew in May, reaching 50.8, with buyers reporting new business wins for their firms in mainland Europe and China.

Lower levels of work also led to a fall in employment, down from 50.5 in April, to 49.2 in May.

Output prices reached a record high of 62 last month, attributed to the increase in purchasing costs. Although input prices receded from their high of 78.3 in April, higher material prices and the weakness of sterling increasing the cost of raw materials bought overseas still saw the index reach 75.9 in May.

* Further coverage of PMI reports is available at http://www.supplymanagement.com/pmi



SMjun2008

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