Contraction worries for UK manufacturing

CIPS 1 August 2011

UK manufacturing PMI sinks below crucial 50 mark.

The Markit/CIPS Purchasing Managers’ Index® (PMI®) manufacturing PMI has signalled contraction for the first time in two years. The figured posted 49.1, down from the previous month’s 51.4.
The main focus was on output growth slowing to near stagnation. New orders halted due to weaker domestic market conditions. The labour market was affected with the first job losses reported since March 2010.

David Noble, CIPS CEO, said, “Alarm bells are ringing or the UK manufacturing sector, which has seen conditions deteriorate rapidly since the start of the year. In marked contrast from those record highs, weaker consumer demand, sluggish domestic orders and a conservative approach to inventory holdings are weighing down on the overall health of the sector.
Business from overseas buyers still remains strong, contributing to a marginal growth in output. But, we need to be careful that the sector doesn’t become too reliant on this alone. Jitters around overall demand in the sector can also be seen with the first fall in employment in 16 months.  Unless conditions improve we may have a real problem on our hands. If there is a small chink of light in this gloomy space, then the reduction in supply chain disruption is worth noting, which has had an impact on overall business performance these last months.
Following the sprint run earlier this year, we are hoping that the manufacturing sector is merely moving into a slower but steady marathon pace as conditions prove to be increasingly challenging and threats remain.”

For press enquiries, call the Press office on 01780 756777 or email: The PMI data is available to purchase

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