The UK’s manufacturing industry is firmly stuck in recession, according to the August Purchasing Managers’ Index (PMI) published by the Chartered Institute of Purchasing and Supply (CIPS) this morning.
The PMI dropped from 47.0 in July to 46.4 in August and the rate of decline for a number of key indicators increased during the month. This is the lowest PMI level since the beginning of 1999, signalling overall contraction of the UK manufacturing economy for the sixth consecutive month. Moreover, in line with the recognised definition of recession, the latest data on output also show contraction for the sixth month running in August.
The negative picture shown by the manufacturing economy as a whole, however, was not shared across each of the three broad sectors covered by this survey. Whilst the intermediate and investment goods sectors continued to lead the deterioration of the broader economy, output and order books in the consumer goods sector continued to grow modestly during August, says the CIPS report.
Also released today was a report from the Confederation of British Industry (CBI) which claims that confidence and profitability in the service sector are both on the decline. Confidence has fallen most in the business and professional sector, including, for example IT services and advertising agencies.
Office for National Statistics (ONS) figures show that the country officially went into recession in August, as manufacturing output declined for two consecutive quarters. Advertising growth forecasts from Zenith Media and ABN Amro also indicate that a full consumer recession – so far avoided – could be on the horizon (see Forecasts).
