The pace of UK manufacturing growth slows in July
The impressive recovery by Britain’s manufacturers slowed last month as new figures pointed to the sector’s weakest performance in a year. However, it is continuing to enjoy one of its strongest growth periods for 22 years, a survey has suggested.
Manufacturing production rose during the month to meet strong demand, according to research firm Markit. However, the pace of growth slipped to its lowest in just over a year, the firm said.
Data from the closely watched The Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) survey for July gave a weaker-than-expected reading of 55.4, down from 57.2 a month earlier – but still well above the 50 threshold, indicating growth. Economists said they were not overly worried by the figure, which comes on the back of one of the sector’s best quarters in two decades. However, it does raise fears that businesses are starting to feel the impact of sterling’s strength, as well as jitters over looming interest rate rises and a drag on some European export markets due to the crisis in Ukraine.
Businesses may be concerned that the crisis in the Ukraine could escalate further, weakening demands for exports to key European markets, senior Markit economist Rob Dobson said.
“If the situation with Russia deteriorates further, we should expect goods exports to come under further pressure,” Mr Dobson said.
The Markit figures support Bank of England expectations that growth would slow down slightly from the rate seen in the first half of the year, he added.
Lee Hopley, chief economist for manufacturing industry body EEF, said that firms should not be alarmed by the survey findings.
“The survey continues to point to growth in activity across the sector, and at a faster pace than the long-term average,” Ms Hopley said in a blog post.