British manufacturing growth slows


Published: Friday 2nd January 2015 by The News Editor

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Growth in Britain’s manufacturing sector slowed to a three-month low in December marking a dismal end to 2014, figures showed.

The pound fell a cent against the dollar as the closely-watched CIPS/Markit purchasing managers’ index survey today posted a worse than expected reading of 52.5 – where the 50 figure separates growth from contraction.

It was a fall from November’s reading of 53.3 and gave an average performance for the fourth quarter as a whole of 53, the weakest for a year-and-a-half.

Meanwhile separate figures today showed eurozone manufacturing also ended 2014 on a subdued note, with rates of growth remaining close to stagnation.

In the UK, the dismal performance of the manufacturing sector will come as a disappointment amid hopes of rebalancing the economy towards industry and away from its reliance on consumer spending.

Rob Dobson, senior economist at Markit, said: “The latest survey provides further evidence of the ongoing slowdown in the UK manufacturing sector, with output and new order growth easing to their second-weakest rates during the past year-and-a-half.

“The main weak spot remains exports, with overseas new order inflows stagnating amid weaker economic growth in key markets and the ongoing lethargy of the euro area.”

However, he said positives included continued overall growth and solid increases in workforce numbers, with the domestic market driving new contract wins.

Mr Dobson the sector still performed well over 2014 as a whole, with growth averaging at its highest since 2010.

ING Bank economist James Knightley said the latest figures showed “that the long hoped for economic rebalancing story is not playing out as envisaged”.

Howard Archer, chief UK and European economist at IHS Global Insight, said manufacturing had “clearly lost appreciable momentum” since peak levels in 2014, but added: “Nevertheless, the survey evidence still clearly points to manufacturing expansion and there are grounds to hope that the sector can enjoy a decent 2015.”

Mr Archer said the weaker-than expected figure today was likely sustain strong belief that the Bank of England will not be raising interest rates “before the latter months of 2015”.

Published: Friday 2nd January 2015 by The News Editor

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