UK manufacturing growth slows in the face of subdued demand from Europe

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BRITISH manufacturing growth slowed unexpectedly to its weakest rate in more than two years in June, after the strong pound subdued export demand, according to an influential survey.

The Markit/CIPS manufacturing purchasing managers’ index (PMI) fell to 51.4, the weakest reading since April 2013, from a downwardly revised 51.9 in May. The slowdown in manufacturing means Britain’s economy will become even more reliant on other sectors, such as services, to drive growth, said data company Markit.

“The UK manufacturing sector had a disappointing second quarter overall,” said Rob Dobson, economist at Markit. “Growth trends in output and new orders were the weakest since the opening quarter of 2013, as a strong sterling exchange rate and subdued demand from mainland Europe offset the continued solidity of the domestic market.”

Mr Dobson said export trade was likely to remain a drag on the economy, after official data on Tuesday showed net trade subtracted 0.6 per cent from economic growth in the first three months of the year. The official figures also showed manufacturing output rose just 0.1 per cent in the first quarter. More promisingly, the PMI survey reported that manufacturers took on staff at the fastest rate in three months during June, adding to positive trends in Britain’s labour market.

Andy Tüscher, the region director for Yorkshire and The Humber at EEF, which represents manufacturers, said: “Today’s data reflects continued weakness in demand in the oil and gas sector and a return to subdued demand in Europe after tentative signs of an improvement earlier in the year. However, there are some positive signs about the domestic economy underneath this, with consumer goods performing well while employment in manufacturing continues to expand, suggesting companies are still positive about growth.”