Business

UK manufacturing growth 'at five-month low'

Containers at Tilbury docks
Image caption Manufacturers were hit by rising raw materials costs and slowing consumer demand

UK manufacturing grew at its slowest pace for five months in March as new orders dropped after consumer spending slowed, a survey has found.

The Markit/CIPS purchasing managers' index fell to 57.1 last month, down from a revised 60.9 in February.

A score above 50 indicates growth in the manufacturing sector.

The survey also found manufacturers had increased prices at the fastest rate since the study began in 1999 to offset rising raw material costs.

"The mini-boom in UK manufacturing ran out of steam during March as faltering domestic consumer confidence, inflationary pressure and supply chain disruption combined to slow down expansion," said David Noble, chief executive of the Chartered Institute of Purchasing and Supply (CIPS).

"Hopes that the UK economy might start to rebalance towards manufacturing seem to be withering on the vine," he added.

'Unwelcome combination'

Despite the fall in the PMI index, Markit/CIPS pointed out that at 57.1, it remained well above the long-run average level of 51.3.

March's reading also means that the sector has now expanded for 20 months in a row.

However, the survey found that new orders had risen at the weakest pace since last October.

The rapid rise in prices charged by manufacturers may add to the problems faced by the Bank of England's Monetary Policy Committee.

The committee has so far kept interest rates at the historic low of 0.5% in order to help growth in the economy, but Consumer Prices Index inflation is now at 4.4% - well above the 2% target.

"Manufacturers reported an unwelcome combination of slower growth and rising price pressures in March," said Rob Dobson, senior economist at Markit and author of the report.

"The Monetary Policy Committee's balancing act between growth and inflation has perhaps become even more precarious."

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