UK Manufacturing Hits the Buffers
I wrote recently about a sharp decline in the growth of Chinese manufacturing, with some in the developed world attributing this decline to the trend of bringing manufacturing back to the west. A World Bank study into the future of Chinese manufacturing would appear to support this perspective, with the report emphasizing the need for Chinese companies to focus on quality rather than price.
Alas recent data from the Purchasing Managers Index (PMI) reveals that British manufacturing has seen a similar drop. The data shows that the UK manufacturing industry experienced its slowest ever growth in the four months to April.
The fall was due to a drop in demand from across the board, as European, American and Asian buyers kept their money in their pockets. Overseas demand for UK goods has dropped for two of the past three months, which represents their fastest decline since May 2009. The sharp decline in exports caused total new order books to shrink for the first time in five months.
The news coincided with the official slide back into recession as the UK economy shrank for the 2nd quarter in a row.
Howard Archer, at IHS Global insight, added: “[They are] an early blow to hopes that the economy will return to growth in the second quarter, especially as the Queen’s Diamond Jubilee will hold back overall economic activity in the quarter.
Manufacturing output shrank by 0.1pc in the first three months of the year, according to the Office for National Statistics (ONS), and has now failed to deliver any economic growth in a year."
Lee Hopley, chief economist at EEF, the manufacturers’ organization, said: “The ability of UK manufacturers to tap into growing global demand has been an important source of growth and, without this engine, the uncertainty about whether we can regain significant momentum behind the recovery will remain.”