Bloomberg News

U.K. Manufacturing Expansion Unexpectedly Slowed in June

July 01, 2011

(Updates with pound in third, fifth paragraphs, comment in fourth.)

July 1 (Bloomberg) -- U.K. manufacturing growth unexpectedly slowed in June as waning global demand reduced orders, a survey showed.

A gauge based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply fell to 51.3 from a revised 52 in May, according to an e-mailed report in London today. That’s the lowest level since September 2009. The median forecast 26 of economists in a Bloomberg News survey was for a reading of 52.3 in June.

The pound erased its gain against the dollar after the report, which follows data earlier today showing manufacturing also slowed in June in China, India and the euro area. Bank of England Governor Mervyn King said this month that risks to Britain’s recovery justified policy makers’ decision to keep the key interest rate at a record low of 0.5 percent.

“Manufacturers remain in cautious spirits as the global slowdown has been constraining export growth,” said CIPS Chief Executive Officer David Noble. “Of most concern looking ahead is how far problems such as domestic austerity measures, the euro-zone debt crisis and monetary tightening in markets such as China may start to soften growth even further.”

The pound dropped as much as 0.3 percent against the dollar after the report was published. It traded at $1.6024 as of 9:51 a.m. in London.

New orders at factories fell for a second month in June, reflecting “subdued” domestic conditions and “slower growth” in exports, Markit said. Companies “reported higher demand from Asia, mainland Europe and the U.S., but noted that slower global economic growth was constraining new export order inflows.”

King told lawmakers on June 28 that while inflation is “clearly uncomfortably high,” the bank’s mandate allows it to refrain from interest-rate increases when that may “lead to undesirable volatility in output.”

Edinburgh-based Wolfson Microelectronics Plc said June 27 second-quarter revenue will be “toward the lower end of previous guidance” as customers delayed product introductions. The company also cut its growth forecasts for 2011.

--Editors: Fergal O’Brien, Andrew Atkinson

To contact the reporter on this story: Jennifer Ryan in London at jryan13@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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