Manufacturing sector contracts for sixth successive month

3 November 2008
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03 November 2008 | Paul Snell

Activity in UK manufacturing shrunk for the sixth month in a row in October, with analysts saying there was "no doubt" the sector is now in recession.

The CIPS/Markit Purchasing Managers' Index, where a figure below 50 represents contraction, posted a figure of 41.5 in October, slightly above the record low of 41.2 recorded the month before. Rob Dobson, senior economist at Markit, said credit market turmoil and a fall in global demand had been a "dreadful combination" for manufacturers.

Activity in the other major indicators, including output, new orders and employment, also continued to contract. Output fell to 42.4, declining at a slightly slower rate than September's figure of 41.7. New orders slowed, recording 37.8, compared with 36.3 in September.

Weak domestic demand was coupled with a drop off in the number of foreign orders. The 43.5 recorded was the lowest level since September 2001. The drop in work also affected staff levels, which fell to 40.5 last month. The survey said large firms were cutting jobs more quickly than SMEs.

Although input costs continued to rise, there was a huge fall in the rate of growth. Prices reached 55.6 in October, compared with 71.8 last month. It showed recent falls in oil and commodity prices were now being experienced by purchasers.

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