Manufacturing slump as record growth goes into reverse

3 May 2011

3 May 2011 | Lindsay Clark

UK manufacturing has seen its growth decline to the lowest rate in seven months, a survey of buyers has found.

The Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) dropped to 54.6, down from 56.7 in March. It was well below January’s high of 62, but was still above the crucial no-change mark of 50.

Rob Dobson, senior economist at Markit and report author, said the outlook for the sector had deteriorated sharply, while growth in new orders had collapsed from a booming pace at the start of the year. “Manufacturers reported that the domestic market has weakened considerably in recent months, with consumer demand in particular shifting into reverse gear. The sector appears to now be completely reliant on export orders to sustain growth,” he said.

Meanwhile, the PMI report revealed several challenges for buyers. Average purchase prices rose for the 20th consecutive month in April, reflecting increased costs for chemicals, food products, metals, oil, packaging and timber. However, inflation dropped sharply to a five-month low.

Shortages of certain goods also contributed to price rises in April, as highlighted by a lengthening in vendor lead times. Increased delivery times were also linked to low stock holdings at suppliers and disruption resulting from the Japan earthquake, the report said.

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