Fears for UK manufacturing recovery

A decline in UK factory activity during September today fuelled fears that the British manufacturing sector's recovery is running out of steam.

A decline in UK factory activity during September today fuelled fears that the British manufacturing sector's recovery is running out of steam.

The Chartered Institute of Purchasing & Supply's (CIPS) headline measure, which provides a single-figure snapshot of operating conditions in the sector, posted 49.5, down from 49.7 in August and below the no-change mark of 50.

CIPS chief executive David Noble said: "The latest data will disappoint those hoping for a quick economic recovery.

"However it must be remembered that after hitting an unprecedented low in November last year, we have seen the manufacturing industry make a significant rebound."

The CIPS purchasing managers' survey showed growth for the first time since April last year during July before faltering in August and September.

Total new orders increased for the third successive month in September, but to a lesser extent than in previous months.

Vicky Redwood, UK economist at Capital Economics, said: "It seems that the recovery is struggling to maintain momentum now that the boost from the easing in destocking is fading."

CIPS said new export business rose at a faster rate than in August, helped by improving overseas market conditions and the weak sterling exchange rate.

It also reported job losses in the sector for the 17th month in a row, although the rate eased to its slowest pace since June last year.

Job losses were mainly centred on large-sized manufacturers, with employment largely unchanged at small companies.

Despite today's sluggish performance, the Ernst & Young ITEM Club said it still expected official data to show the sector expanded in the third quarter of this year.

Economist Hetal Mehta added: "Though the car scrappage scheme will help to boost output, it seems unlikely that there will be sufficient demand to sustain a strong revival. It looks like the manufacturing sector is entering a period of gradual recovery with growth likely to be slower and patchy."

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