Britain's Manufacturing Slumps to 26-Month Low
Thursday, September 01, 2021 10:13 AM

Manufacturing in Great Britain slumped the most in more than two years in August 2011, as demand from domestic and overseas customers weakened. A gauge by Markit Economics and the Chartered Institute of Purchasing and Supply fell to 49, the lowest in 26 months, from 49.4 in July. That matched the median forecast of 27 economists in a Bloomberg News survey. The result was stronger than the market estimate of 48.5 from a survey of economists, but another reading below the 50 level indicates the sector has contracted for a second consecutive month.


Manufacturers said the drop in demand was due to weaker domestic and export sales and rising global economic uncertainty. Markit economist Rob Dobson said, “The sudden and substantial drop in new export orders is particularly worrisome. As consumer and business confidence are slumping both at home and abroad, it is hard to see where any near-term improvement in demand will spring from.” Samuel Tombs, an economist at Capital Economics, said, “The CIPS survey highlights the increasing risk that the industrial sector—and perhaps even the overall economy—is heading for a double-dip.”


The report shows that the volume of new orders in the sector declined for the fourth consecutive month and at the sharpest rate since April 2009 due to weak domestic demand, rising global economic uncertainty and lower levels of new export business. Manufacturing employment fell for the first time in 17 months. The level of new work received from overseas clients fell at the fastest pace since May 2009, a marked turnaround from the near-record growth seen last December. But in a sign that inflationary pressures are easing, the survey showed factory gate prices rose at the weakest rate since November. That appears to support the Bank of England's decision to hold interest rates at a record low for more than two years even though inflation is above its target. David Noble, CEO of CIPS, said, “Falling output signals a Great Britain manufacturing sector in reverse-drive; much different to the dynamism of the early half of the year.”