A slowdown in growth was seen in the UK manufacturing sector during April 2012, reflecting a sharp decline in export demand, according to a report released today by the Chartered Institute of Purchasing & Supply (CIPS) and financial information services firm Markit.
The seasonally adjusted Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) dropped to 50.5 in April, compared to a revised figure of 51.9 for March. Anything above the neutral mark of 50.0 indicates expansion rather than contraction and the PMI has registered growth in each of the past five months.
Manufacturing output expanded for the fifth consecutive month in April, but the rate of growth was the slowest seen all year and total new order books declined slightly for the first time in five months. This reflects the steepest fall in new export orders since May 2009 due to weaker demand from mainland Europe, the US and East Asia.
A key point to note in the report is that increases in output partly reflected work on existing contracts?, with backlogs of work declining for the 15th month in a row and at a faster than average pace. Rob Dobson, senior economist at Markit, commented that manufacturers are still sustaining growth through past demand and firms really need to see a marked improvement in new order inflows.
Purchasing executives who took part in the survey reported an easing in cost inflationary pressures but still paid higher prices for chemicals, eggs, feedstock, fuel, metals, oil and polymers. Additionally, some suppliers were said to be raising their charges to take account of increased transport costs.
Meanwhile average output price inflation continued to accelerate in April, with charges rising at their fastest rate for seven months as manufacturers passed on higher input costs to customers.
Lastly, there is some good news in the report for manufacturing sector employees on International Workers’ Day, with a small increase in payroll numbers recorded for the fourth successive month.
The Markit/CIPS UK Manufacturing PMI is based on monthly replies to questionnaires sent to purchasing executives in more than 600 industrial companies.