UK manufacturing PMI unexpectedly enters contraction territory

The Markit/CIPS UK manufacturing purchasing managers’ index slipped to 49.2 in April from a downwardly-revised 50.7 in March, missing expectations for a reading of 51.2.

This was the first time the PMI fell below 50.0 - the level that separates contraction from expansion - in over three years, as it was dragged lower by lacklustre trends in production and new orders and declines in both employment and stocks of purchases.

Rob Dobson, senior economist at Markit, said: “On this evidence manufacturing production is now falling at a quarterly pace of around 1%, and will likely act as a drag on the economy again during the second quarter and putting greater pressure on the service sector to sustain GDP growth.

“The manufacturing labour market is also being impacted, with the data signalling close to 20,000 job losses over the past three months.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The drop in the manufacturing PMI to below the 50 ‘boom-bust’ mark for the first time since March 2013 confirms that the weaker pound is not offsetting the hit to demand resulting from uncertainty fostered by the EU referendum.”