The Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) posted 52.1 in May, from a downwardly revised reading of 54.4 in April.
Although the PMI remained above the neutral 50 mark for the 22nd successive month, it dropped to its lowest level since September 2009. The survey shows that production and new orders declined for the first time since mid-2009, with the consumer goods sector and small manufacturers hit hardest.
Rob Dobson, senior economist at financial information services company Markit, says, ‘The UK PMI suggests that manufacturing has moved from rapid expansion to near stagnation.’
He adds, ‘Domestic market weakness was the main drag on order books and output.’
Manufacturers also blamed the additional bank holidays during the period for the slowing growth in the sector.
David Noble, CEO of the Chartered Institute of Purchasing and Supply, suggests that disruption to manufacturing supply chains following the Japanese earthquake and shortages of raw materials also had a noticeable negative impact. However, he remains positive about the outlook for UK manufacturing.
‘With the level of export orders still rising and the rate of inflation easing somewhat, we expect that May will come to be seen as an anomaly.’
Employment held up well in May, with staffing levels rising for the 14th successive month.
Chief economist at EEF, the manufacturers’ organisation, Lee Hopley, believes that UK manufacturing is ‘coming off the boil’ following two years of growth.
‘The question is whether the positive trends in recruitment being reported across the sector give us cause to look through some of the external and temporary factors that will have dampened activity over the past couple of months and these indicators will simply begin to normalise after a strong rebound in the months ahead,’ says Hopley.
