PMI slumps to 47.5

The authoritative Markit/CIPS Purchasing Manager's Index(PMI) remained below the neutral 50.0 mark in October, dropping to 47.5 from September's 48.1 in September. Production volumes were scaled back for the fourth straight month in October, while manufacturers linked lower levels of new business to reduced inflows of new export orders and weaker domestic demand. New export business declined at the second-fastest pace in just over a year, mainly due to the ongoing economic weakness seen in mainland Europe. There were also some reports of lower demand from clients in Asia. Unemployment also rose in October, reflecting lower demand, spare capacity, redundancies and the non-replacement of leavers. Rob Dobson, senior economist at survey compilers Markit said the road to an export-led recovery was still blocked by difficulties in the Eurozone, adding "it is concerning to hear further reports of the global slowdown hurting trade with other regions such as Asia." David Noble, CEO at the Chartered Institute of Purchasing & Supply believed there was little in the figures to encourage the industry. "Where once it looked like high growth areas in Asia might offer opportunities to offset the acutely fragile situation in the Eurozone, it now looks like the global economic slowdown is stifling demand in Asia which is threatening to depress the manufacturing industry in the UK still further." He said the one vestige of hope for the industry came from the consumer goods sector which bucked the trend. EEF chief economist Lee Hopley said that further weakening in Europe remained as "the big risk on the horizon and will continue to drive caution across the sector".