Manufacturing sector continues to show downward trend: CIPS |
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Thu, 02 Jun 2005 23:25
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The Chartered Institute of Purchasing and Supply (CIPS) figures for the month of May are not too good for the manufacturing sector in the UK, which continues to show a slow and steady decline.
The report went from bad to worse, as it emerged that more than 5,500 people lost their factory jobs in May. Out of these 700 jobs were lost as the collapse of MG Rover in April began to take full effect. Due to this, the CIPS purchasing managers' index fell to 47.3 in May from 49.1 in April. A score below 50 means that the sector is in recession. CIPS said that this low reading was due to the fact that new businesses are not blooming due to which production is being scaled back.
Howard Archer, an economist at Global Insight, said, “ This is a particularly depressing report on the manufacturing sector, even by recent standards, and it seems set to act as a significant drag on growth again in the second quarter. Clearly, manufacturers will be hoping the Bank of England cuts rates well before the year-end.”
| Malcolm Barr, an economist at JP Morgan, said, "The manufacturing sector is unambiguously in rate cut territory. The key question is the extent to which it is indicative of trends in the economy as a whole."
The employers' organization, CBI has estimated that the British manufacturing sector will shed 42,000 jobs in the first half of the year. But, industry captains say that the industry will recover in 12 months' time, a claim which Sabina Kalyan, property economist at Capital Economics, dismissed, “The gloomy current conditions are difficult to square with purchasing managers’ increased optimism about prospects for the sector,” Kalyan said.
But Roy Ayliffe, director of professional practices at CIPS, said, “Despite the sluggish data, panelists remained confident of large projects and the expectation of increased opportunities to tender in the coming year.”
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