The British manufacturing is approaching negative growth thanks largely to a decline in exports to the troubled euro zone, according to a monthly index released Tuesday.
The Markit/CIPS Purchasing Managers' Index for the manufacturing sector fell to 50.5 in April, down from 51.9 in March. The report also showed the sharpest decline in new export orders since March 2009. The U.K. economy is in recession and a contracting manufacturing sector would make the push back into positive territory more challenging.
It's obviously quite a disappointing figure and the fact that the weakness is reported to be in export orders is clearly quite worrying and it's a concern I suppose because the story needs to be in the UK that it can weather the storm of the eurozone, chief economist at BNP Paribas David Tinsley told The Telegraph.
The March figure was downwardly revised from an original estimate of 52.1. Any downward revision of April's figure could indicate the U.K. manufacturing sector contracted last month. The U.K. entered the second dip of a double-dip recession in fourth quarter 2011 when the country's GDP shrank by 0.3 percent. The economy contracted 0.2 percent in the first quarter.
The monthly Markit/CIPS survey on Britain's services sector is due out Thursday. In March, that index rose to 55.3 from 53.8 in the previous month, leading some economics to predict an economic rebound was on its way.
Any decline in U.K. services activity, coupled with the lackluster April manufacturing results, might lead the Bank of England to extend its qualitative easing policy of expanding the money supply. The bank meets on May 9 and 10.