UK manufacturing growth slows
British manufacturing eked out growth in April as an economic slowdown in the euro zone curbed demand for goods made in Britain, a survey showed, raising the risk of a longer recession.
The unexpectedly sharp slowdown will also fuel a debate over the chances of further monetary stimulus from the Bank of England (BoE), after central bankers hinted that they might not extend their asset purchases later this month given a raft of stronger economic data and sticky inflation.
The Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) dropped to 50.5 in April from a downwardly revised 51.9 in March, keeping the sector just above the 50 level which separates growth from contraction.
The reading, the lowest since December, fell short of economists’ forecasts for a dip to 51.5 and will disappoint a government grappling with news of a shrinking economy and a series of political blunders only days before Thursday’s local elections, a key test of popular support.
The PMI also lends some credence to disputed official data that showed an economic contraction in Britain in early 2012, tipping the country back into recession.
The BoE and many economists have argued that the official figures understate the economy’s true strength, pointing to more upbeat evidence from surveys, including earlier PMIs.
“What manufacturers really need to see is a marked improvement in new order inflows,” said Rob Dobson, senior economist at Markit, which compiles the PMI survey.