Business

UK manufacturing growth slows in April

Car production line
Image caption The government hopes manufacturing will lead the UK's economic recovery

The UK's manufacturing sector grew at its weakest pace for seven months in April, a survey suggests.

The Markit/CIPS UK manufacturing purchasing managers' index (PMI) fell to 54.6 last month from a downwardly-revised 56.7 in March.

A reading above 50 indicates expansion.

Manufacturing has been one of the healthiest sectors in the economy since the UK emerged from recession at the end of 2009, with the PMI now showing growth for 21 months in a row.

Although output prices fell in April, they remained close to March's peak, indicating that inflation is still high.

"There was a dip in the output prices component, but it is still the third-highest index reading since the series began in 1999," said James Knightley from ING Financial Markets.

"Consequently, the issue of weak growth and high inflation will continue to trouble the Bank of England (BoE). Given they have a mandate of targeting 2% inflation in two years' time, the worrying outlook for growth favours patience from BoE policymakers."

The data reduced the likelihood of an interest rate rise this week, he added.

Philip Shaw from Investec said the figures were disappointing, but not overly concerning.

"It's unclear whether the drop in the index reflects a genuine slowdown in demand for manufactured goods or whether it reflects a degree of supply disruption arising from the tsunami in Japan in March," he said.

While that was unclear, it added weight to the argument to keep rates on hold, he said.

"For now, even at 54.6 the level of the PMI continues to indicate healthy expansion in manufacturing output."

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