-UK CIPS Oct Manufacturing PMI 47.5 Vs 48.1 In Sep: Markit/Reuters

LONDON (MNI) – The UK manufacturing sector contracted further at
the start of the fourth quarter, with new orders falling and jobs being
shed.

The October CIPS/Markit Purchasing Managers’ Index from Reuters
fell to 47.5 from a revised 48.1 in September (48.4), hitting its lowest
level since July.

The official data showed manufacturing posted a 1% rise on the
quarter in Q3 but the CIPS data, which can be viewed as a measure of
underlying activity, have shown a sector still shrinking.

The headline reading was below analysts’ median forecast for a 48
outturn.

Manufacturing employment declined for the second successive month
in October, although the rate of job losses was less marked than in
September.

New orders declined for the seventh consecutive month in October,
dropping to 47.7 from 49.9 in September.

Markit said manufacturers attributed the decline in new business
to a drop in new export orders and to weaker domestic demand.

New export business fell at the second-fastest pace in just over a
year, hit by the weakness of the Eurozone.

“The downturn in the UK manufacturing sector gathered pace at the
start of Q4 2012. Production and new orders fell at faster rates as
manufacturers faced a quiet domestic market and a further deterioration
in new export orders.” Rob Dobson, Senior Economist at Markit, said.

One bright spot in the Markit survey was a rebound in the consumer
goods sector which reflects the recent strong outturns in UK retail
sales.

Analysts warned manufacturing could show a contraction in the
official data in Q4 after its strong showing in Q3.

“Based on past experience, at this level the index points to
quarterly falls in manufacturing output of over 1%. This suggests that
the 1.1% rise in industrial production in Q3 was entirely the result of
the reversal of June’s bank holiday effect,” Vicky Redwood, Chief UK
Economist at Capital Economics, said in a note.

-London newsroom: +44 207 862 7491; email:drobinson@marketnews.com

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