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September 2011 | Adam Leach
Activity
in the UK manufacturing sector has fallen to a 26 month low, according to the
Purchasing Managers’ Index (PMI) for August.
The
Markit/CIPS PMI report for the
sector reported a drop to 49 last month, indicating activity had shrunk. A
figure below 50 indicates contraction. This is a fall from a revised figure of
49.4 in July, and is the lowest recorded since June 2009.
The
report noted there was lower production of raw materials and plant and
machinery and although production of consumer goods rose to a five month high,
it was merely to replenish low stock levels rather than to service increased
demand. New orders declined for a fourth consecutive month as manufacturers
attributed weak performance to a lack of demand and overall economic uncertainty.
David
Noble, CEO at CIPS, said: “Falling output signals a UK manufacturing sector in
reverse-drive; much different to the dynamism of the early half of the year.
The weakness of the UK consumer market looks like it is here for the long haul,
despite a slight burst of activity in August as consumer goods manufacturers
looked to rebuild their inventories from a low base.”
“The
silver lining at this point is the continued easing of inflationary pressure
which is helping many businesses to protect their margins and maintain their
prices, despite input costs staying relatively high.”
Rob
Dobson, senior economist at Markit, said the sudden drop in new foreign orders
was worrying, as UK firms were hit by growing global concerns about the
economy. “As consumer and business confidence are slumping both at home and
abroad, it is hard to see where any near-term improvement in demand will spring
from,” he said.
