Manufacturing, Orders And Exports Tumble

UK manufacturing fell in August, along with exports, new orders and employment, a survey has revealed.

The Markit/Cips purchasing managers' index (PMI) for manufacturing fell to 49 last month, representing a 26-month low, which is the weakest level since June 2009 and the second straight month of the sector's contraction.

The Markit/Cips is based on a survey of purchasing executives at over 600 firms.

The news comes as Prime Minister David Cameron drove the two millionth Mini off the production line during a photo-opportunity at a plant in Oxford.

"The export success of the Mini and BMW’s continued investment in its UK operations have helped contribute to a 'real renaissance' for the UK car industry", the PM said.

However, the survey's figures tell a different story, with August seeing the sharpest fall in new orders for exports in two-and-a-half years, and the first drop in output since 2009.

On Wednesday, consumer confidence for an economic recovery was revealed to be at its lowest point for over a year with expectations unlikely to improve, according to a leading market research agency.

A study by GfK NOP, published this week said the measure for the general economic situation of the country during the last twelve months has stayed the same this month at its lowest point of -57, fourteen points lower than this time last year.

The study also found that expectations for the next twelve months had decreased by four points to -31, seventeen points lower than August 2010.

Nick Moon, Managing Director of GfK NOP Social Research, said: "Previously, it had only been as low on two other occasions: during the downturn of 2008 and 2009 and in the turbulent early months of 1990. On both occasions, the decline in consumer confidence mirrored a slide into recession."

Mr Moon said that an increasing number of indicators suggested the economy is either stagnating or returning to recession, while the continuing loss of consumer confidence is a major worry for the government.

"However, while there has been a 4-point drop in consumers' general view of the economic situation over the next 12 months, there has been a small improvement in how they view their own financial situations, suggesting that people are adapting to the austere economic climate."

The UK Consumer Confidence Survey from GfK NOP was conducted amongst a sample of 2,000 individuals aged 16 and over on behalf of the European Commission.

The combination of a employment market stuttering, little wage growth, high inflation, tough fiscal policy, and turmoil in global financial markets, has kept consumer confidence low for much of 2011.

(DW/CD)