UK factories in second month of contraction

Ben Southwood
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THE UK manufacturing sector contracted for a second straight month in March, numbers showed yesterday.

Though the UK’s purchasing managers’ index (PMI) inched up from 47.9 in February to 48.3 last month, it could not breach the crucial 50 barrier to show growth in manufacturing, and hence pointed only to a slowed pace of decline.

“These weak numbers may be sufficient to tip the balance and convince more members of the Bank of England’s monetary policy committee to consider additional quantitative easing at their meeting next week,” said Rob Dobson at Markit, who released the figures jointly with the Chartered Institute of Purchasing and Supply (CIPS).

“The onus is now on the far larger service sector to prevent the UK from slipping into a triple-dip recession,” Dobson added.

CIPS boss David Noble warned that this downturn came not just from the continued Eurozone catastrophe, but also from vigorous competition from US and South Asian companies in the UK’s export markets.

This came as separate figures, seen by City A.M., suggested London business confidence shot up over the past few months. The Institute of Chartered Accountants in England and Wales’ (ICAEW) business confidence monitor for the capital was 12.5 in the first quarter of 2013, up from two in the last quarter of 2012.

But London’s confidence was still slightly below the country’s as a whole, which stood at 12.8, ICAEW’s numbers revealed.

Still, London firms were optimistic that the coming year would see growth across many metrics pick up. Exports are expected to climb 4.9 per cent over the next 12 months, having grown 4.2 per cent over the past 12, according the ICAEW, while gross profit is expected to grow 5.9 per cent up from 3.5 per cent reported last year.

But ICAEW warned that firms were bemoaning more and more regulatory interference. Forty-seven per cent of London businesses surveyed by the industry body said that the challenge of regulation was up over the year – versus 37 per cent a year ago.