Growth cooling for UK industry as Europe lags

GROWTH in the UK manufacturing sector slowed during March, but stayed ahead of the major Eurozone economies, according to a major survey of firms released yesterday.

Markit’s purchasing managers’ index (PMI) figure for the UK was down on last month, and came in below expectations at 55.3. Any number above 50 indicates that the sector is expanding.

The UK’s manufacturing PMI figure has now dipped every month this year, but still suggests stronger growth than the 53 recorded in the Eurozone.

“Some cooling in the pace of manufacturing from the highs recorded in the fourth quarter of 2013 is perhaps not terribly surprising. With activity relatively firmer in key UK trading partners, we would not expect the softening to go much further,” said David Tinsley of BNP Paribas.

France’s improved PMI reading was particularly notable, returning to modest growth at 52.1, higher than the earlier estimate and the first month in which French industrial firms have indicated growth since the summer of 2011.

Spain’s figure also improved, with a score of 52.8, following the steady climb of the sector indicated by the country’s PMI in recent months. However, the German figure dropped again this month, falling to the lowest level since November, at 53.7.

“Countries have benefited in the order of their reform progress, with Spain taking a lead. In France, the bounce in the PMI probably better reflects reality now, which is a moderate underperformance of the rest of the Eurozone rather than a recession,” said Berenberg’s Christian Schulz.

Eurozone unemployment figures also released yesterday showed the jobless rate flat at 11.9 per cent.

Spain recorded a welcome 0.2 percentage point drop in unemployment from January, to 25.6 per cent. The rate has dropped by one percentage point since the same month last year.

Italian and French rates of each ticked up by 0.1 per cent, to 13 and 10.4 per cent respectively.