–Adds Detail To Version Transmitted at 1100 GMT
–UK Oct CIPS Manufacturing PMI 47.4 In Oct Vs 50.8 In Sep

LONDON (MNI) – The UK manufacturing Purchasing Managers Index
slumped back into contraction territory in October, coming in at 47.4
from a downwardly revised 50.8 in September (51.1), according to the
latest Markit/Chartered Institute of Purchasing and Supply survey.

Markit/CIPS noted that the fall had been driven by the fastest
decline in new orders since March 2009, with the only good news that
inflation pressures appear to be easing.

The decline in new orders will weigh on future output, and the data
are fueling concerns about the possibility of negative growth in Q4.

Rob Dobson, Senior Economist at Markit and author of the
Markit/CIPS Manufacturing PMI:

“The UK manufacturing PMI fell sharply back into contraction
territory in October. The most worrying aspect of the survey is the
trend in new orders … Companies are facing tough conditions in both
domestic and overseas markets, meaning that output is increasingly being
sustained through the depletion of backlogs of work.”

Dobson added that “A marked recovery in the replenishment rate of
order books is needed to prevent the renewed manufacturing downturn
becoming embedded”.

While output and new orders decline, input costs and output prices
rose at their slowest rates for some two years.

The Markit/CIPS report was published just ahead of the Q3 GDP data
on Tuesday, which showed the economy expanded 0.5% on the quarter, in
part due to the reversal of one-off effects which dampened output in Q2.

Bank of England Monetary Policy Committee members have said they
fear there could be negative growth in Q4 and the CIPS October
manufacturing data, the first of CIPS’ Q4 numbers, embody this concern.

“I wouldn’t be terribly surprised if we were to see output contract
in the fourth quarter,” Bank of England Monetary Policy Committee
member Martin Weale said in a recent Channel 4 interview.

Philip Rush, economist at Nomura, noted that as CIPS’ new orders
had fallen even more than output, the scope for a rebound in
manufacturing activity in November was limited.

–London newsroom: +44 207 862 7492; email:ukeditorial@marketnews.com

[TOPICS: MABDS$,M$B$$$]