2014.09.0203:31:31UTC+00British manufacturing at lowest in over a year

Last month’s market survey has shown that manufacturing activity in the UK region grew at its slowest pace in 14 months with a decline in the filling of order books.

According to the latest reading of the Markit/Cips UK Manufacturing Purchasing Managers’ Index (PMI), activity levels dropped to their lowest since June 2013 of 52.5 during the month of August to fall below market expectations expressed through a poll conducted by Reuters. The rate was lower than July’s rate which was earlier revised down to 54.8, but is still above the long term average. Prices at factory gates similarly fell by posting the weakest growth since March.

Factories’ rate of new employee hiring also grew at the slowest pace in over a year with small and medium sized businesses offsetting the reduced rate present in larger firms.

The primary mover for the decline was a drop in the new orders component as shown through its largest monthly fall in two years which brought it from July’s 56.8 to August’s 52.9, the lowest since April 2013.  While growth just slightly above the 50 level that distinguishes an expansion from a contraction, UK consumers will now have an increased role in driving the region’s recovery during the last remaining months of the year.

Separate data for the eurozone likewise assessed that the level of manufacturing activity in the region fell below expectations. Earlier this week, the UK’s primary trade group, the EEF, reduced its 2014 growth forecast after orders for exports were revealed to have dropped.

Senior economist Rob Dobson from Markit says that, “"It is becoming increasingly evident that UK industry is not immune to the impacts of rising geopolitical and global market uncertainty. That's especially true when they affect economic growth and business confidence in our largest trading partner, the eurozone.”