UK factory production lower as orders slump

(Reuter) – Activity in the British manufacturing sector shrank more than expected in September as export orders fell and costs soared, a survey showed, raising the risk that the economy will falter after rebounding in the past few months.

The CIPS/Markit Purchasing Managers’ Index (PMI) for the manufacturing sector fell to 48.4 from an upwardly revised 49.6 in August, dipping further below the 50 mark which separates growth from contraction.

The latest signs of renewed weakness in manufacturing will support the view that the recovery is fragile and that the Bank of England will extend its quantitative easing asset purchases once the current round is completed in November.

Manufacturers cut production for the third month in a row, with all major sectors seeing a contraction.

“Overseas sales continue to be hit by the ongoing deterioration in global economic growth, with the eurozone the UK’s largest export market at the epicentre of the weakness,” said Markit chief economist Chris Williamson.

“In this global economic environment, manufacturers look certain to struggle and the sector is unlikely to act as a driver of economic growth,” he added.

Manufacturing production jumped 3.2% in July, posting the sharpest monthly rise in 10 years.