Manufacturing contraction starts to ease

Adam Leach is a freelance business journalist
posted by Adam Leach
1 May 2013

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The decline in activity in the UK manufacturing sector began to level out in April as the market moved close to neutral territory, according to a report.

The Markit/CIPS UK Manufacturing PMI for April recorded a figure of 49.8, indicating that contraction in activity had slowed since March, which recorded a figure of 48.6 – a figure of 50 indicates no change. Respondents said both production and new orders had risen from the month before.

The near return to neutrality was driven, in part, through stronger growth in the consumer and investment goods sectors, though intermediate producers also reported slightly improved conditions. Purchase prices in the sector dropped for the first time in eight months as a result of lower commodity and fuel prices. But chemical, food, and plastic prices continued upwards. A growth in demand from the Americas and the Middle East sparked a modest increase in export volumes.

Rob Dobson, senior economist at Markit, said: “Following the poor start to the year, when manufacturing acted as a drag on the economy in the opening quarter, it is welcome to see the sector showing signs of stabilising in April. With forward-looking indicators such as new orders and the demand-to-inventory ratio also ticking higher, the sector should at least be less of a drag on broader GDP growth in the second quarter.”

CIPS CEO David Noble, said: “A march of the makers may be on its way following the first rise in export sales for a year with the Americas, Middle East and Australia making up for lacklustre demand in Europe, giving the manufacturing sector something to savour.”

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