Decline eases in UK manufacturing

3 January 2012

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3 January 2012 | Adam Leach

The rate of decline in the UK manufacturing sector eased in December, offering a faint sign of stabilisation of activity.

The Markit/CIPS UK Manufacturing PMI for last month, released today, reported a figure of 49.6, just below the no-change score of 50. While a stronger performance than November’s score of 47.7, the result indicates the sector is continuing to contract.

The rate of decline slowed largely as a result of an increase in the number of export orders for the first time in five months, with new orders coming in from Germany, Eastern Europe and China. The rate of growth in exports was the highest since April.

However, despite the rise in export activity, the total amount of new orders fell for the sixth month in a row, indicating a lack of strength in the domestic market.

Commenting on the findings, CIPS CEO David Noble said: “There are fragile signs of growth centred on some very specific parts of the sector where demand remains strong, particularly consumer and capital goods, with some businesses even reporting record growth that defies the gloom. That said, for every bright spot there is another business struggling to build momentum.”

Rob Dobson, senior economist at Markit, said: “December brought some brighter news for UK manufacturers. The level of production stabilised following contractions in October and November as a solid upsurge in new export business countered some of the weakness in the domestic market.

“Looking ahead, manufacturers are currently relying heavily on backlogs of work to prop up production. This is only a temporary fix and the trend in overall order books needs to improve if the sector is to avoid a protracted period of lacklustre performance.

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