Decline in UK manufacturing slows as recession bites

4 February 2009

04 February 2009 | Paul Snell

Activity in the UK manufacturing sector continued to decline in the first month of 2009, although at a slightly slower rate than in December.

According to the latest CIPS/Markit Purchasing Managers' Index, where a figure below 50 demonstrates contraction, the sector recorded a figure of 35.8 in January, compared with 34.9 posted in December. This was still the third weakest figure in the index's history.

The fall in new orders also eased slightly, but also declined to its third lowest level. The financial crisis, a lack of available credit and poor demand from the automotive, construction and retail industries were blamed. Demand from abroad also continued to fall, despite the weak exchange rate.

The lack of activity contributed to a record drop in employment. The index registered a figure of 33.5 last month, compared with 33.9 in December. This was the tenth consecutive month staff numbers have contracted and the fifth month in a row the index has reached a record low. The sector is estimated to have cut around 30,000 jobs per month in the last quarter, and this still worsening.

Good news for buyers could be found in shorter delivery times from vendors for the fourth month in a row. Input prices also continued to fall, although slower than in December because of the weakness of sterling.

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