Manufacturing reaches a cliff

Here is a telling sign that confidence in UK manufacturing industry is ebbing away at an alarming rate. The latest Purchasing Managers Index doesn’t normally figure in the AS or A2 economics course - but the numbers for orders from buyers in industry look horrendous. A figure for the PMI of below 50 is said to herald a contraction in demand and output. The latest data shows sentiment and expected demand at its lowest levels for many a long year - indeed the weakest data on orders since the survey was created in 1992 - a recession year for the UK economy. I have tracked the PMI against manufacturing output for each month since 1992.

The figures will put increasing pressure on the Bank of England to cut interest rates in a week’s time by 0.25% or perhaps 0.5% - indeed it may move on interest rates as part of a concerted attempt by the central banks of the EU, the UK and the USA to bolster business and consumer confidence.

PMI data in PowerPoint

PMI_Manufacturing.ppt