UK manufacturing activity grows less than forecast, Markit reveals

UK manufacturing activity expanded less than expected in March as output growth remained unchanged from February’s seven-month low, data revealed on Friday.

Markit’s purchasing managers’ index came in at 51.0 in March, up slightly from February’s 34-month low of 50.8. Analysts had forecast a reading of 51.2.

While the reading was above the 50 mark that signals an expansion in sector activity, the average for the first quarter of the year equalled the lowest since 2013, Markit said.

Production rose at an unchanged pace and new orders saw a modest improvement. However, levels of new export business decreased for the third straight month in March due to softer global economic growth.

“The UK manufacturing sector remained in the doldrums during the opening quarter of the year,” said Rob Dobson, senior economist at Markit.

“Although March saw modest improvements in the trends for production and new orders, industry is still hovering close to the stagnation mark and will struggle to make a meaningful contribution to the next set of GDP growth figures.”

Dobson said the drop in sterling may boost export performance in coming months but the exchange rate is likely to impact costs through higher import prices as it aids demand.

“This could apply an unwelcome additional strain to manufacturers’ margins, coming at a time when many are still having to pass on lower commodity prices to maintain competitiveness and alongside the introduction of the National Living Wage.”