PMI sinks to two year low

The 21-month low was driven by slumps in both domestic and international demand for UK goods, the Markit/CIPS data showed. New orders dipped for the second successive months with a sluggish growth in export demand, the survey reported. Employment rose at its slowest pace in nine months, the data revealed. PMI- a barometer of industry growth calculated on data from new orders, output, and employment- has sunk every month since January. The data cast doubt over manufacturing's ability to drive the UK's economic recovery, experts claimed. Rob Dawson, senior economist at Markit said: "The survey data will call into question the sector's ability to play a major role in delivering a robust and sustainable recovery." Manufacturing had slipped into "growth lite" mode since hitting a PMI high of 62 this January said David Noble, CEO at CIPS. More trouble lurked with the fallout from the financial crisis in Greece, he predicted. Noble said: "Manufacturers remain in cautious spirits as the global slowdown has been constraining export growth." He added: "Of most concern looking ahead is how far problems such as domestic austerity measures, the Euro Zone debt crisis and monetary tightening in markets such as China may start to soften growth even further." The PMI slump highlighted the input price squeeze faced by UK manufacturers according to Barclays head of manufacturing Mark Lee. Businesses must respond by focusing resources on new export markets, Lee said. He said: "For those UK manufacturers that feed into domestic supply chains and ultimately the British high street, there is little good news to be had." "Many producers will therefore be scrambling to tap into more promising export markets, although international competition is only becoming ever more fierce, particularly as nations such as China rapidly develop their domestic production capabilities."