ALMOST three years of growth in the UK manufacturing industry ended last month, following further falls in new orders and job cuts.
The closely watched construction purchasing managers' index from the Chartered Institute of Purchasing and Supply (Cips) revealed that the PMI index posted a reading dead on the neutral 50 mark – a level indicative of stagnation – for the first time
since July 2005.
Output prices have now increased in each of the past 34 months, by far the most sustained period of "charge inflation" in the series' history.
New work fell again, as it has in every month this year, recording a reading of 48.3 on the New Orders Index.
Experts said yesterday that the drop showed a general reluctance among clients to commit to new contracts.
Roy Ayliffe, director of professional practice at Cips, said: "Following a further decline in new work for UK manufacturing firms, May marked the end of a three-year period of sustained growth and entry into a period of 'stagflation' – no growth and high inflation."
The sector also reported a continued rise in costs, boosted by an increase in the price of oil, fuel, transportation, base metals and food products.
But many firms passed on these costs to customers. The seasonally adjusted Output Prices Index recorded a reading of 62.0 – the most sustained period of charge inflation in the series history.
Manufacturing new orders declined for a fifth month, while weak domestic demand conditions were the main drag on total order books as the level of new export orders posted a slight gain on the month.
The full article contains 270 words and appears in The Scotsman newspaper.
