New order growth at its slowest rate in 10 months

GROWTH in new orders in the UK manufacturing sector slowed to its weakest pace in 10 months in July, as incoming export business continued to fall, a survey has revealed.

The report, published by the Chartered Institute of Procurement & Supply, provides further evidence of the unbalanced nature of the UK’s economic recovery.

It shows the pace of growth of overall activity in the UK manufacturing sector edged up from June’s 26-month low. However, it remained modest, and CIPS noted the July expansion was below average for the current sequence of growth that began in April 2013.

CIPS’s headline purchasing managers’ index (PMI) for the UK manufacturing sector rose from the 26-month low of 51.4 in June to 51.9 in July on a seasonally-adjusted basis, still only modestly above the level of 50 deemed to separate expansion from contraction.

The new orders index dropped from 52.7 to 52.2 to signal the weakest monthly increase since September last year. And new export orders fell for a fourth consecutive month in July, with CIPS citing the impact of sterling strength.

Employment in the UK manufacturing sector rose for a 27th consecutive month in July, although the rate of increase was below the average for this sequence of rising headcounts.

CIPS noted expansion of production remained highly dependent on the strong performance of the consumer goods sector, which had offset lacklustre growth at intermediate goods producers and a contraction in the investment goods sector.

UK gross domestic product grew 0.7 per cent in the second quarter but manufacturing output fell 0.3 per cent, official figures have shown.

Rob Dobson, senior economist at survey compiler Markit, said the manufacturing sector was “near-stagnant” and added: “It seems that we will again look to the service sector to sustain any semblance of reasonable economic growth in the third quarter.”