Surveys reveal factory slump eased in August

Julian Harris
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BRITAIN’S manufacturing sector declined at its slowest rate in four months in August, a widely-regarded survey revealed yesterday.

Yet many analysts remained downbeat over the industry’s prospects.

A purchasing managers’ index (PMI) conducted by Markit and the Chartered Institute of Purchasing and Supply edged up to a score of 49.5 last month, from 45.2 in July.

The rate of decline is shown by how far the figure is below the no-change level of 50.

British manufacturing appeared to be bouncing back from recession strongly in 2010, yet Markit’s PMI has recorded sub-50 scores in nine of the past 14 months, as global economic woes take their toll.

“The [headline] rise was driven by the decent rise in the output balance from 43.3 to 48.7,” commented Capital Economics in a note.

“However, on the basis of past form, the latter balance is still consistent with sharp falls in the official measure of manufacturing output of around on per cent a quarter.”

Lee Hopley, chief economist at the manufacturers’ group EEF, added: “Taken together with another round of awful data from Europe, the outlook for export-focused manufacturers, and hopes of an export-led economic recovery, continue to look pretty challenging.”

New orders at UK factories were virtually flat last month, providing some relief after they plummeted in July with a score of 41.8.

Yet Nida Ali of the Ernst & Young Item Club said that she still expects GDP to have grown in quarter two.