UK manufacturing activity contracted for a third consecutive month in April, although the pace of decline slowed, according to a key survey.
The survey, published yesterday by the Chartered Institute of Purchasing and Supply (CIPS), underlines the challenges facing the sector given the weak UK economic backdrop and tough conditions in some eurozone marketplaces.
CIPS's headline purchasing managers' index for manufacturing, a composite measure of activity and leading indicator that includes output, new orders, employment, suppliers' delivery times and stocks of goods purchased, rose from 48.6 in March to 49.8 in April on a seasonally adjusted basis. But it remained below the level of 50 calculated by CIPS to separate expansion from contraction, to signal a third straight month of decline.
Employment in UK manufacturing fell for a third consecutive month, according to CIPS's survey, although the rate of decline in the workforce eased.
Samuel Tombs, UK economist at consultancy Capital Economics, said: "April's CIPS manufacturing survey offers a glimmer of hope that the sector's recession might be coming to an end. But stagnation, rather than outright expansion, may be the best that manufacturers can hope for this year -
"We are reluctant to conclude at this stage that [the] manufacturing survey signals the start of a 'march of the makers'."
Mr Tombs was alluding to Chancellor George Osborne's vision, spelled out in his March 2011 Budget, of a "Britain carried aloft by the march of the makers".
CIPS's manufacturing output sub-index rose from 47.8 in March to 50.5 in April on a seasonally adjusted basis. Mr Tombs said the latest reading was consistent on past form with "broadly flat" manufacturing output in terms of official data from the Office for National Statistics (ONS).
CIPS's survey signalled a marginal rise in total new orders for UK manufacturers in April, after falls in each of the preceding two months.
UK manufacturers' export orders rose for the first time in 13 months, with improved demand from North America, the Middle East, Latin America, and Australia.
Citing a 0.3% fall in UK manufacturing output in the first quarter, on the basis of UK gross domestic product figures published last week by the ONS, Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "Despite the headline reading showing marginal contraction in manufacturing activity in April, the purchasing managers' survey shows some modestly positive developments that lift hopes the sector can return to growth, albeit likely modest, in the second quarter after reportedly contracting by a further 0.3% quarter-on-quarter in the first quarter, following a pretty torrid 2012."
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