Business

UK manufacturing slump continues as export orders drop

Overseas demand for UK-manufactured products fell for the third consecutive month
Image caption Overseas demand for UK-manufactured products fell for the third consecutive month

The pace of decline in the UK manufacturing sector eased in June but the sector remained in recession as export orders continued to fall.

The closely-watched Purchasing Managers' Index (PMI), compiled by Markit , rose to 48.6 last month from May's three-year low of 45.9.

Despite the improvement, the sector remains below the 50-mark that indicates contraction.

The data showed overseas demand fell for the third straight month.

Economists said the weak data heightened pressure on the Bank of England (BoE) to act to boost growth when its nine-strong committee meets on Wednesday. The Bank will announce its decision on Thursday.

Last month, members voted narrowly against further quantitative easing to try to stimulate lending and growth.

Bank of England governor Mervyn King said last week that the UK's economic outlook had worsened markedly in the space of just six weeks due to the deepening eurozone crisis.

"The data is merely telling us that the pace of contraction has slowed rather than the sector is expanding. Consequently, this is not going to block a further round of quantitative easing from the Bank of England on Thursday given the tone of recent BoE comments and the fact that the vote was so close last time," said ING economist James Knightley.

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