Britain's hard-pressed manufacturing sector is firmly mired in recession, suffering a further fall in activity levels in August, a key survey published today said.
The Chartered Institute of Purchasing and Supply's (CIPS) report, showed the seasonally-adjusted purchasing managers' index (PMI) for the manufacturing sector slid to 46.4 in August from July's 47.0. Any reading below 50 signals economic contraction.
The index - a composite of several variables from output to employment - has now fallen for six months in a row to stand at its lowest level since the start of 1999. Economists had forecast a PMI reading of 46.8.
Gloomy news from Britain's factory sector comes just days ahead of the latest meeting of the Bank of England's Monetary Policy Committee (MPC), which is expected to leave lending rates unchanged at 5% this week. The MPC announces its rate verdict on Thursday.
The grim manufacturing outlook was mirrored across Europe where data released on Friday showed the euro zone PMI registered its fifth month of contraction at 47.6 in August. But that was up from 47.3 in July, the first rise since April 2000, and was above economists' forecasts of 47.1.
Britain's manufacturing sector, which accounts for about one-fifth of the UK economy, has long been in the doldrums but there have been recent signs that the dominant services sector has also begun to succumb to the slowdown in global demand.
The slowdown means Britain's economic growth rate is likely to be around 2% this year, lower than the Treasury forecast of 2.25% to 2.75%.
But the negative picture shown by the manufacturing economy as a whole was not shared across each of the three broad sectors covered by this survey.
While the intermediate and investment goods sectors continued to lead the deterioration of the broader economy, output and order books in the consumer goods sector continued to grow modestly during August.
