EVEN in the context of people’s lowly expectations for the struggling UK economy these days, the latest survey of manufacturing activity is a big disappointment.
And hopes are not high that things are about to suddenly get much better for the UK manufacturing sector, which saw its growth slow to its weakest pace in 17 months on the Chartered Institute of Procurement & Supply’s headline measure. Manufacturers’ optimism about the prospects of higher activity in a year’s time slipped to a five-month low.
UK gross domestic product figures, published last Friday by the Office for National Statistics, were also a major disappointment, showing the economy grew by just 0.1 per cent in the first quarter.
Howard Archer, chief economic adviser to the EY ITEM Club think-tank, put it well. He described CIPS’s latest monthly manufacturing report as a “disappointing survey that increases concerns that the UK economy has lost momentum and that the first-quarter GDP weakness was not just due to the severe weather”.
Duncan Brock, director at CIPS, warned “It appears the disappointing start to the year is set to continue in the second quarter.”
Mr Archer declared CIPS’s survey would “fuel caution at the Bank of England and makes a May interest-rate hike increasingly unlikely”.
Sterling was at 5pm last night down more than 1.4 cents on its Monday close in London against the greenback at $1.3609, with CIPS’s survey viewed as reducing further the chances of an interest-rate rise when the Bank of England’s Monetary Policy Committee meets next week. The pound also fell against the euro, which rose nearly 0.4p to 88.15p.
If anyone is in doubt over how big a disappointment the survey was, even after the miserable GDP data, they should consider these drops in sterling. And reflect on the fact they followed steep falls on Friday after the grim GDP figures.
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