Exporters started to feel the effects of the Eurozone debt crisis on their order books last month, it has been claimed.
According to the Chartered Institute of Purchasing and Supply (CIPS), although manufacturing remained strong in June, growth in exports slowed sharply prompting renewed fears of a double-dip recession.
The ‘Purchasing Managers’ Index (PMI), compiled by the CIPS and Markit, fell to 57.5 from 58 following a “sharp slowing down of new export orders”.
The index looks at manufacturers’ new orders, employment, production and stocks, with a figure of 50 or above denoting growth.
However, the figures indicated that employment in manufacturing grew at its fastest rate since February 1995, while domestic markets remained steady.
David Noble, chief executive officer at CIPS, said: “It’s been a tense month for the UK manufacturing sector. The sector maintained strong momentum in June but looming headwinds are causing some insecurity. All eyes will be peeled to see if the sector can carry forward this strong pace in the second half of the year.”
Manufacturers have reported a significant increase in overseas orders in recent months, which have been boosted by sterling’s relative weakness.
However, Noble said the European debt crisis, and the Euro’s increasing instability, prompted a decline in export orders from Europe in June.
“We’re already starting to see the turbulent Eurozone make its mark, which is causing unease given that export orders arguably led the sector out of recession,” he added.
“In addition, although we’ve seen employment levels peak again, this is very much a lagging indicator and it’s too early to say if this will be maintained.
“The only thing clear at the moment is that manufacturers will certainly have to work hard to outstrip competition and secure future business wins if this pace of recovery continues and provides much-needed stability.”
© Crimson Business Ltd. 2010