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The slowdown in global growth is hitting orders for UK goods

UK manufacturing sector growth fell to its lowest rate for 21 months in June as new orders declined, a survey says.

The Markit/Cips manufacturing purchasing managers’ index (PMI) for June fell to 51.3, down from May’s downwardly revised measure of 52.0. A figure above 50 indicates expansion.

Markit said that growth was “stalling”, with weak domestic demand and the recent boost to exports now fading.

However, there were signs that inflationary pressures had eased.

“The manufacturing sector continued to slip closer to stagnation in June,” said Rob Dobson, senior economist at Markit.

“The data will call into question the sector’s ability to play a major role in delivering a robust and sustainable economic recovery.”

Global demand

The rate at which companies were hiring staff slowed, and new orders fell for the second month in a row, Markit found.

However, there was also a sharp fall in the inflation rate for goods that manufacturers buy.

“Input price and supply-chain pressures eased noticeably in June, which will… add weight to the Bank of England’s monetary belief that the current spike in inflationary pressures will prove transitory,” said Mr Dobson.

The EEF manufacturing body cautioned against overplaying the slowdown in the overall PMI figure.

“Behind the headline figure, the detail shows production, export orders and employment all still edging up, albeit at a more subdued pace than earlier in the year,” said Lee Hopley, the EEF’s chief economist.

“However, with spending cuts now kicking in, it is clear that any support to growth from the domestic market is likely to be minimal.”

Ms Hopley added that this lack of domestic demand meant firms were “exposed to events in the global economy where persistent weakening of activity indicators across Europe and Asia would start to raise alarm bells about the UK’s prospects”.