Manufacturing still in decline despite improvement in June

Posted on 2 Jul 2012 by Tim Brown

The contraction in British manufacturing slowed in June but the sector is still struggling according to the latest PMI survey from CIPS/Markit .

The Markit/CIPS manufacturing PMI climbed to 48.6 in June from a three-year low of 45.9 in May, but anything below 50 indicates a contraction in activity.

Commenting on the latest PMI numbers, Ms Lee Hopley, Chief Economist at EEF, the manufacturers’ organisation, said: “The more positive take is that conditions appear to have stabilised but the extremely weak indicators coming out of Europe highlight the on-going drag UK companies are experiencing on new order intake from overseas customers.

“We’ve also seen a lot of volatility in the manufacturing indicators recently, driven in part by bank holiday closures which is making it tricky to get a clear picture of underlying trends.  It does however look as though there are still significant risks remaining to recovery gaining momentum as we go into the second half of the year.”

Manufacturing output expanded in June following a drop in May according to the PMI, but new orders fell. The eurozone debt crisis continued to weigh on foreign demand for British goods, with new exports falling for the third month in a row.

Manufacturers also reported that slowing economic growth in the US and Asia had a negative impact on exports.