LONDON (MNI) – The UK manufacturing sector contracted in December,
but only marginally, slowing less rapidly than economists had expected.
The Markit/Chartered Institute of Purchasing and Supply survey from
Reuters came in at 49.6, well above analysts’ median forecast for a 47.6
outturn, and up from a revised from 47.7 in November.
While the headline index suggests the sector is stabilising, the
quarterly data are more alarming with Markit noting that over Q4 as a
whole output and new orders showed the sharpest falls since the second
quarter of 2009.
The data will leave open the debate among economists over whether
UK growth will turn negative in the fourth quarter.
“Over the fourth quarter as a whole, producers reported their worst
performance since the second quarter of 2009. Manufacturing will
therefore likely be a drag on the economy in the closing months of the
year,” Rob Dobson, Senior Economist at Markit, said.
Dobson added that manufacturers were relying on backlogs of work to
prop up production, but this would only provide a temporary fix.
New export orders rose for the first time in five months in
December, despite the Eurozone turmoil. Markit said this reflected
increased new work from East Europe and China and Germany.
The Bank of England Monetary Policy Committee’s latest forecasts
showed flat growth in both the fourth quarter of this year and the first
quarter of next.
The last of the National Statistics data before the Christmas break
showed, the October services sector output data, showed a 0.7% monthly
fall, supporting the view taken by some analysts that Q4 growth could
turn negative.
–London newsroom: +44 207 862 7491; email: drobinson@marketnews.com
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