Adding to manufacturing’s woes, Markit/CIPS have also revised down the figure for March to just 51.9. Just as economic optimists were declaring last week’s recession warning from the ONS a minor blip.
In further evidence of a dreaded double dip, exports are also down: in the first three months of 2012, 0.1% fewer goods and services were sold overseas. And that drop is set to double to 0.2% in the upcoming quarter. This is true across the board, adds CIPS. Any slight peaks are down to firms clearing existing backlogs of work.
New orders have dropped for the first time in five months, hitting 49.18, down from 52.41 in March. This is mainly due to a downturn in the consumer goods sector, resulting from weaker demand from mainland Europe, the US and East Asia. Although Burberry doesn’t appear to have any trouble selling its £1,595 Trench coats…
Rising fuel and transport costs, alongside higher prices for chemicals, feedstock, fuel, metals, oil, polymers, and, er... eggs have hit companies hard. But it’s not all bad. Manufacturing firms are still recruiting and diversifying into new product lines to try and adapt to the new retail environment.
Rob Dobson, senior economist at Markit and author of the Markit/CIPS Manufacturing PMI Survey, has adopted a stoic attitude: ‘The UK recovery was always likely to be bumpy and subdued,’ he points out.
But April’s sudden sharp drop in new export orders will still be a real disappointment. It suggests that the turmoil in our major trading neighbour, the eurozone, is really starting to hit home. Still, it’s important to remember that with a PMI above 50, manufacturing is still technically growing, if only just.