UK manufacturing downturn highlights weakness

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UK manufacturing downturn highlights weakness

UK manufacturing downturn highlights weakness
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The start of manufacturing in Britain worsened in October as companies received fewer orders and costs rose at a faster pace.

Production was cut for a fourth month in a row and new orders fell at a faster rate than in September as export demand dwindled.

The downbeat numbers come from surveys of thousands of manufacturing firms’ managers and they end a run of more hopeful data on the UK economy.

It is more bad news for Prime Minister David Cameron underlining the fragility of the UK’s economic recovery.

This reopens the debate on whether the Bank of England will go for more economic stimulus this month.

Most economists expect a feeble recovery from here on at best, as the turmoil in the eurozone continues to weigh and the slowdown in emerging economies like China poses fresh dangers.

Business lobby CBI raised its forecast slightly for this year and next on Thursday, after the bounce in the third quarter, predicting overall stagnation in 2012 and 1.4 percent growth in 2013.

But the Bank’s policymakers have cautioned that the strong growth seen in the third quarter was unlikely to be repeated.

In a worrying sign for the central bankers, manufacturers’ costs rose at the fastest pace since March. Firms also increased their prices, but at a much slower rate than costs rose.

The central bank has been hoping that falling inflation will allow British consumers to spend more and support the economy.