UK manufacturing activity recovers in September

| October 3, 2011 | 0 Comments

The Chartered Institute of Purchasing and Supply (CIPS)/Markit manufacturing purchasing managers’ index (PMI) has today revealed UK manufacturing activity bounced back last month.

The closely-watched CIPS/Markit manufacturing PMI rose to 51.1 in September from August’s reading of 49.4.

Activity has contracted for the last three months and today’s survey means the index has moved back above the crucial 50 mark – which separates growth from expansion.

The reading was also better than forecasts of 48.6.

The pick-up means the Bank of England is likely to keep interest rates on hold at the historic low of 0.5% when its rate-setting committee meets later this week.

However, Markit revealed that new export orders contracted at the fastest rate since May 2009, while employment fell for the third consecutive month.

Commenting on the figures, Markit economist Rob Dobson, said: “The modest return to growth of UK manufacturing output in September is a positive, but it is hard to escape the fact that the sector’s performance has weakened substantially since the opening quarter’s growth surge.

“The data suggests that the positive contribution of manufacturing to the broader economic recovery is likely to remain modest, at best, through the remainder of the year.”

The manufacturing sector accounts for around 13% of economic output.

Construction activity and service sector activity figures will be published later this week.

In other news today, it emerged that manufacturing in the euro zone contracted at the quickest pace in two years last month.

Markit’s PMI fell to 48.5 in September from August’s reading of 49 – meaning the index is below the crucial 50 level.

The news comes as the 17-member nation struggles with the debt crisis and shares have fallen this morning as fears grow that Greece will be unable to avoid defaulting on its debts.

Manufacturing activity in Greece contracted for the 25th consecutive month, Markit said, while powerhouse Germany, also saw activity grind to a halt.

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