British factories had their weakest month in nearly three years in February as demand at home slowed and export orders fell, a survey showed today.
The Markit/CIPS manufacturing Purchasing Managers’ Index (PMI) fell sharply to 50.8.
The reading - the weakest since April 2013, when Britain was finally starting to recover strongly from the financial crisis and outperform most other rich economies - underscored why the Bank of England has said it is ready to pump more stimulus into the economy if needed.
“The near-stagnation of manufacturing highlights the ongoing fragility of the economic recovery at the start of the year and provides further cover for the Bank of England’s increasingly dovish stance,” Rob Dobson, a senior economist at Markit, said. “The breadth of the slowdown is especially worrisome.”
New orders in February were their weakest since the turnaround began in 2013. Consumer and investment goods orders bore the brunt of slower growth in demand at home and a further fall in orders from abroad, Markit said.
As well as the slowing of the global economy, Britain’s June 23 referendum on its membership of the European Union could cause uncertainty and weigh on the country’s growth rate, economists have said.
The survey was mostly conducted before a latest sharp fall in value of sterling in late February which would make British goods cheaper abroad. The manufacturing sector cut jobs for a second month in a row although the decline was mild. Companies said they cut the prices of their goods for the sixth month in a row but the fall was slightly less marked than in January.
Mr Dobson said the falling prices reflected intensifying competition between manufacturers as well as the fall in commodity prices.
Manufacturing weighed on Britain’s overall economic growth at the end of last year, leaving the country’s much bigger services sector as the sole driver of the recovery.