Manufacturing sector continues to grow – just
THE UK manufacturing sector has managed to maintain growth but performance slipped slightly last month, latest figures show.
It is thought increased oil prices are having a major influence on the sector with many firms hit by steeply rising costs.
The latest Markit/CIPS Purchasing Managers’ Index (PMI) for manufacturing slipped to 51.2 last month, down from 52 in January. A figure above 50 implies growth.
Nida Ali, economic advisor to the Ernst & Young ITEM Club, said the plus-50 figure provided a crumb of comfort for the sector, although underlying demand remained weak.
She said there was now a risk the sector would slow in the months ahead although a double-dip recession would probably be avoided.
“Any hopes for a further improvement in the manufacturing PMI, on top of last month’s high, would have been optimistic. Given the numerous headwinds buffeting the sector, the continued expansion of output in February provides a crumb of comfort,” she said.
“With new orders remaining broadly unchanged, while production was largely supported by clearing out backlogs of work, there is clear evidence that underlying demand is weak. Against this backdrop, we would expect growth in the sector to slow in the coming months.
“UK manufacturers’ fate is closely tied to developments in the Eurozone and the survey reports that demand from Europe declined. The ongoing Eurozone debt crisis continues to pose a significant downside risk to the sector, and the struggle for manufacturers is far from over.”
She said the hope now was that GDP growth would post a small positive in Q1.
The price of Brent crude rose 10% last month to $125 a barrel, partly due to worries over the effect of oil sanctions on Iran. The effects are already being felt in the West Midlands with the price of diesel at pumps breaking through the £1.50 per litre barrier for the first time.
