Friday, July 01, 2011
Disappointing manufacturing index
Posted by David Smith at 09:45 AM
Category: Thoughts and responses

The manufacturing purchasing managers' index slipped to 51.3 in June, a 21-month low, from 52 in May. Though production edged up, other components were weak, notably domestic and export orders, and employment growth, which was at a nine-month low.

According to Markit:

"The manufacturing sector continued to slip closer to stagnation in June, with the PMI sliding to a 21-month low. It is worrying to see that the slowdown is not just being driven by the weakness of domestic market strength, with growth in new exports having also slowed sharply since the start of the year as the global economic recovery drifts into a softer patch.

"It is also disappointing to see that the easing in supply chain delays has yet to feed through to a much hoped for revival in manufacturing growth.

"With strong headwinds already in place and austerity measures likely to put increasingly counteractive pressure on domestic and consumer demand, it looks as if manufacturing has entered a slower growth phase which could be with us for some time. With manufacturing growth in the first quarter having been revised down from an earlier buoyant estimate of 1.1% to a far less impressive 0.7%, the survey data will call into question the sector’s ability to play a major role in delivering a robust and sustainable economic recovery."