April’s PMI reading sat at 53.9, the lowest since November 2016 – a 17-month low. Although still expanding (any reading over 50 signifies such), this was down from 55.1 in March and well below the 54.8 predicted by City analysts.
Added to this, the growth of new export business was at its lowest for 10 months, and job creation hit a 14-month low, fuelling fears about the long-term health of the economy.
Some experts, however, have moved to reassure the industry.
“Today’s data does point to a loss of momentum in the sector but that’s no reason to get carried away just yet,” said Mike Rigby, Head of Manufacturing at Barclays. “Growth in output continues to tick up, albeit slower than in previous months, and new orders and employment remain in positive territory. Manufacturers continue to report healthy order books from the ongoing improvement in global export markets and although challenges with the supply-chain are persisting, manufacturers remain optimistic and, as they have proved time after time, they are good at just getting on with business.”
“The start of the second quarter saw the UK manufacturing sector lose further steam,” added Rob Dobson, director at IHS Markit, who compile the PMI survey. “While adverse weather was partly to blame in February and March, there are no excuses for April’s disappointing performance, making the chances of a near term hike in interest rates by the Bank of England look increasingly remote.
Dobson also warned that things are unlikely to pick up in the near future.
“Looking ahead, the trend in manufacturing production is likely to remain subdued,” he said. “Weak demand meant firms are seeing backlogs of work fall and stocks of unsold goods rise, limiting the need for output to rise in May. Business optimism has also dipped to a five-month low as concerns about Brexit, trade barriers and the overall economic climate remained widespread.”
