The British manufacturing sector contracted for the first time in six months in May, as companies scaled back production and employment as inflows of new business declined sharply, data from a survey by Markit Economics and the Chartered Institute of Purchasing and Supply (CIPS) showed Friday.
The seasonally adjusted purchasing managers' index (PMI) for the manufacturing sector dropped to 45.9 in May from 50.2 in April, hitting the lowest level in three years. A PMI reading below 50 indicates contraction in the sector, while one above suggests growth. The reading fell below the neutral mark for the first time since November 2011.
Production in UK factories contracted for the first time in six months in May, reflecting weaker global economic conditions, rising competition and a subdued domestic market. New orders received by manufacturing firms decreased in May, with both domestic and export markets showing weakness.
Companies reduced their workforces for the first time in five months in May, mainly reflecting lower levels of output and new orders. Meanwhile, the growth in both input costs and selling prices slowed during the month.
"The PMI sank to a three-year low as firms cut production in response to levels of new work nosediving," Rob Dobson, Senior Economist at Markit, said. "Perhaps of greatest concern is that this month's drop is not simply linked to the ongoing crisis of the Eurozone, but to increasing weakness of the UK domestic market, with overall order books collapsing at a faster rate than export orders."
by RTT Staff Writer
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