The manufacturing industry has slowed by more than expected in April, extending a run of mediocre economic data and further reducing the chances of an interest rate hike by the Bank of England. Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) fell a full point to 53.9 last month, below the median expectation for a reading of 54.8 in a Reuters poll of economists.
This disappointing result follows the figures on Friday that showed Britain’s economy barely grey in the first three months of 2018. “While adverse weather was partly to blame in February and March, there are no excuses for April’s disappointing (PMI) performance, making the chances of a near-term hike in interest rates by the Bank of England look increasingly remote,” said Rob Dobson, director at survey compiler IHS Markit.
The report also shows that business confidence among manufacturers has fallen to its weakest level in five months, with firms being concerned about the Brexit and the possible future trade barriers. Moreover, the growth of new export business was at its lowest in 10 months and job creation the weakest in 14 months.
“On this footing, the sector is unlikely to see any improvement on the near-stagnant performance signaled by the opening quarter’s GDP numbers,” Dobson said.
Manufacturing output increased by 0.2% quarter on quarter in the first three months of 2018, a far cry from growth rates of more than 1% during the second half of last year and possibly reflecting signs of a slowing of euro zone growth in early 2018.
The Bank of England also reported a drop in the number of mortgages approvals for house purchases in March. There was also a sharp slowdown in the rate of credit card borrowing, which rose by just £100 million in a month, versus the six month average rate of £600 million.
Separate PMIs for the construction industry and the much larger services sector are due on Wednesday and Thursday.