The latest Purchasing Manufacturing Index (PMI) figures released today show that manufacturing in the UK dropped sharply in April; raising fears that the double dip recession will hit harder than feared.
The figures show that the British manufacturing sector barely produced growth last month with the worsening situation in the Eurozone blamed. As a result the manufacturing industry saw its lowest amount of orders since 2009.
The PMI figures dropped from a downwardly revised 51.9 in March to a lowly 50.5, keeping the sector just above the 50 level that divides growth from shrinkage.
The bad news keeps piling up for the UK after optimistic figures for the country’s economy was released last month. This new PMI data supports the disputed figures that led to the announcement of the double dip recession suggesting that last month’s figures were inaccurate.
“What manufacturers really need to see is a marked improvement in new order inflows, It seems that weaknesses in our major trading partner, the euro zone, are starting to hit home, especially for consumer goods producers,” ,” said Markit, which compiles the PMI survey.
The decrease in demand for British exports could now be compounded by the fact that the pound is currently trading at its strongest level for more than two years. The high level could sap demand from exporters and hurt businesses profits.
The surprise news of the double dip recession and these latest PMI figures may put pressure on the Bank of England to reconsider its decision to stop Quantitative easing.
The Pound to Euro exchange rate is currently trading at 1.222
The Pound to US Dollar exchange rate is currently trading at 1.621
The Euro to US Dollar exchange rate is currently trading at 1.325
The Euro to Pound exchange rate is currently trading at 0.817