The UK’S manufacturing sector grew at a slightly quicker rate in May, according to a survey, but its growth remains subdued due to weak demand from abroad and lower investment in the oil industry.
Markit’s manufacturing purchasing managers’ index, a survey of private sector firms, ticked up to a score of 52, from April’s 51.8.
Scores above 50 imply the sector is expanding, with higher scores pointing to faster growth.
“Manufacturing looks on course to act as a minor drag on the economy, as the sector is hit by a combination of the strong pound and weak business investment spending,” said economist Rob Dobson from Markit.
“Where growth is being reported by manufacturers, this remains heavily dependent on the domestic market, and consumer demand in particular.”
Manufacturing accounts for around 10 per cent of the UK’s GDP. In the first three months of the year, the manufacturing sector grew at its slowest rate since 2013, expanding just 0.1 per cent, according to the Office for National Statistics.
“The weakening momentum in the sector is mostly down to a slowdown in oil and gas activity hitting the supply chain, though exports also remain a challenge,” said Lee Hopley, an economist at EEF, a manufacturing body.
Some economists expect the domestic market to continue driving growth.
“The long-observed divergence between a reasonably robust domestic market but weakness overseas has continued, despite the run of better economic data coming out of the Eurozone in the past few months,” said Martin Beck, senior economic advisor to the EY Item Club.
“It is likely that the benefits of stronger demand in these markets are largely being offset by the damage to competitiveness from the 10 per cent appreciation in sterling against the euro since the beginning of the year. These conflicting forces seem set to continue in the short-term.”