LONDON, Sept 1 (Reuters) – Britain’s manufacturing output contracted in August at the fastest pace in eight months as interest rates rose at home and abroad, final results show. the S&P Global/CIPS UK monthly survey released on Friday.
The Purchasing Managers’ Index (PMI) fell to 43.0 in August from 45.3 in July, the weakest reading in 39 months but above an earlier estimate of 42.5 points .
This index is below the 50 mark, separating growth and contraction of activity, for the 13th consecutive month.
Production and new orders in the manufacturing sector have contracted at rates rarely seen outside of crisis periods and companies have been forced to take defensive measures, commented Rob Dobson, director at S&P Global Market Intelligence.
“Purchasing, inventory and staff were all reduced in August as manufacturers strive to control costs, protect margins and operate much leaner and more efficiently,” he said.
However, slowing domestic demand and export orders eased inflationary pressures. Input costs have fallen at the fastest rate since January, which could dampen inflation in goods prices in the coming months.
“The survey data suggests that the central bank will increasingly focus on concerns about the health of the economy in its upcoming monetary policy meetings,” Rob Dobson said.
With inflation close to 7% in July, the Bank of England looks set to raise rates for the 15th consecutive time on September 21, even as the economy shows signs of slowing which some economists say will soon turn into a recession.
The final PMI for the services sector, the most important for Britain, is due on Tuesday. A first reading pointed to a two-year low in August. (Reportage William Schomberg, French version Corentin Chapron, edited by Kate Entringer)
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