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Manufacturing drops 'like a stone'

 

Peter Cripps
Tuesday 01 November 2011 08:29 EDT
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Double dip recession fears were fuelled today after a key measure of the health of manufacturing sector "dropped like a stone" to a 28-month low.

A closely watched survey by Markit/CIPS, in which a score of under 50 represents contraction, dropped to 47.4 in October, down from 50.8 the previous month, and its lowest level since June 2009.

The report's authors said the most worrying aspect of the survey was that new orders declined at the quickest pace since March 2009.

Levels of output, new orders and employment were all lower than one month earlier as the crisis in the eurozone hit demand from overseas, while the UK market remained subdued amid the squeeze in consumer spending.

And the sector has now signalled a deterioration in overall operating conditions for three out of the last four months.

The gloomy survey has increased fears that the UK's economy could contract in the final quarter of 2011, despite official figures today showing that GDP grew 0.5% in the three months to the end of September.

CIPS chief executive David Noble said the survey showed the sector's activity had "dropped like a stone" and added that the mood is "somewhat sombre".

He said: "We live in worrying times. The manufacturing sector, which helped to keep growth buoyant earlier in the year, is now struggling to keep its head above water.

"Confidence is being hit hard as the sector feels pressure from all angles, with continued uncertainty in the eurozone being the main contributing factor as last week's short-lived optimism fades."

PA

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