Export order reduction slows UK manufacturing growth

Growth in the UK’s manufacturing sector slowed last month partly due to a sharp reduction in new export orders, according to a new survey.

Manufacturing output increased for the fifth month running in April but the rate of increase fell to its weakest so far this year, according to the Markit/CIPS purchasing managers’ index (PMI).

The index fell from 51.9 points the previous month to 50.5 points, just above the 50.0 mark that separates growth from contraction, driven by decline in the consumer goods sector.

‘The UK recovery was always likely to be bumpy and subdued,’ said Rob Dobson, senior economist at information service Markit and author of the PMI.

‘Although the expansion in output is a positive in itself, as is a modest increase in employment, manufacturers are still sustaining growth through past demand — a circumstance that cannot continue indefinitely.

‘What manufacturers really need to see is a marked improvement in new order inflows, so April’s sudden sharp drop in new export orders was a real disappointment.

‘It seems that weaknesses in our major trading partner, the eurozone, are starting to hit home, especially for consumer goods producers.’

Commenting on the data, Lee Hopley, chief economist at the manufacturers’ organisation EEF, said: ‘The good news is that manufacturing clocked up a fifth straight rise, while cost pressures have eased a little and some companies are still recruiting.

‘The bad is that ever-present eurozone woes are still bearing down on the short-term outlook, with some suggestion of renewed downward pressure on export orders over the past month.

‘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.’