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Saturday 11th of July 2009
December 1, 2008

British and US manufacturing in record falls


by Kay Murchie
”British

Latest figures show that British manufacturing shrank at a record pace in November.

The Purchasing Managers’ Index fell to 34.4 in November, compared to 40.7 in October, the lowest level and the biggest fall experienced since the index began in 1992.

Rob Dobson, senior economist at Markit which collects the data together with the CIPS, said the scale of the downturn in UK manufacturing is unprecedented.

According to Mr Dobson, the data suggests that the UK Government and the Bank of England’s Monetary Policy Committee (MPC) may need to consider additional support to the sector alongside recent sharp cuts in central bank borrowing rates.

Meanwhile, Alan Clarke at BNP Paribas, said manufacturing activity has fallen at a rapid pace and believes it is going to get worse.

When the MPC meets this week, they are expected to cut interest rates by at least 0.5%, according to analysts.

Last month, interest rates were slashed by 1.5% to 3%, following a 0.5% cut the previous month.

In the meantime in the US, manufacturing also fell, sinking to a 26-year low, according to figures from the Institute for Supply Management (ISM).

For the second consecutive month, figures have plummeted to lows last experienced in 1982, with activity falling from 38.9 in October to 36.2 in November.

The figures suggest that the US economic downturn is worsening as a figure below 50 indicates a contraction, according to analysts.

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