British manufacturing expanded at a much weaker pace than expected in December, a survey showed.
The Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) fell to 52.5 from 53.3 in November, hitting a three-month low and falling short of all forecasts in a poll of economists, which had predicted a rise to 53.7. While the index held above the 50 threshold for growth for a 22nd straight month, the survey added to evidence that consumers will remain the main driver of Britain’s economic recovery.
Just over four months before the General Election, in which the recovery will take centre stage, signs of weaker growth in manufacturing could concern Chancellor George Osborne.
The PMI showed growth in new factory orders fell to a three-month low, while export orders stagnated.
“Despite this end of year tapering, the sector still performed well over 2014 as a whole, with growth averaging at its highest since 2010,” said Rob Dobson, senior economist at survey compiler Markit. The average manufacturing PMI reading for the fourth quarter as a whole showed the weakest growth in a year-and-a-half. Manufacturing output rose 0.3 per cent from July through September, a long way from a three and a half year peak of 1.1 per cent in the first quarter, according to national accounts data published last week. With crude oil prices having fallen almost 50 per cent, input prices at British factories slid at the fastest pace since July 2012, according to the PMI.