BRITAIN’S manufacturing recovery appeared to be running out of steam in August as the boost from restocking faded and austerity measures raise concerns of subdued growth prospects, a leading market survey showed yesterday.
The Markit/CIPS purchasing managers’ index for manufacturing disappointingly fell to 54.3 from a downwardly revised 56.9 in July, the biggest one-month fall in more than six years. The drop was caused by a plunge in new orders to 52 from 58.5.
While the index remains comfortably above the 50 level that separates expansion from contraction, economists warned that August’s drop could be the start of a trend.
Hetal Mehta, UK economist at Daiwa Capital Markets said: “The marked deceleration in new orders does not bode well for output in the coming months, and subdued growth in export orders, which is indicative of a slowing global economy, poses downside risks to the UK outlook. Furthermore, there is little sign of the much needed rebalancing of the economy towards exports taking place.”
The Eurozone purchasing managers index (PMI) was revised slightly higher to 55.1 from the initial estimate but still showed a slowdown in activity compared to the previous month. The relatively poor European data comes as the US ISM manufacturing survey staged a surprise rebound in August.