UK manufacturing has hit an unexpected blip, slowing to a three-month low in December.
The UK purchasing managers' index (PMI), from Markit/CIPS, slowed to 52.5, below the 53.7 score expected by economists polled by Reuters and lower too than the 53.3 recorded in October and November. Any score above 50 points indicates growth.
The low score was compounded by rates of expansion in production and new orders shrinking to their second-lowest rates since mid 2013.
Rob Dobson, economist at Markit, said:
The latest survey provides further evidence of the ongoing slowdown in the UK manufacturing sector, with output and new order growth easing to their second-weakest rates during the past year-and-a-half.Despite this end of year tapering, the sector still performed well over 2014 as a whole, with growth averaging at its highest since 2010.
Howard Archer of IHS Global Insight said that the decline in growth should not be taken to mean prospects are now grim. He cited bullish employment numbers and improving consumer purchasing power (wage growth, at 1.6 per cent for regular wages has nosed in front of CPI, at one per cent) as reasons for optimism.
The prospects for domestic demand for manufacturers look reasonable. Hopefully, still relatively healthy consumer confidence, high and rising employment, improving consumer purchasing power and likely reasonably decent housing market activity will underpin demand for consumer durable goods. In addition, the prospects for business investment still look relatively decent over the coming months which would support demand for capital goods.