Britain’s manufacturing activity shrank for a second consecutive month in March, a survey showed on Tuesday, leaving the country’s more resilient services sector as the best hope of avoiding a new recession.
The Markit/CIPS manufacturing purchasing managers’ index came in at 48.3, only slightly above February’s surprisingly poor reading of 47.9, and a touch weaker than the consensus forecast.
The output component of the survey fell in March at its fastest pace since October. There were signs of weakness in the key housing market too.
While lending to Britain’s consumers ticked up in February, the number of mortgage approvals for house purchases fell for a second month, Bank of England data showed. Nonetheless, the value of home-backed lending rose.
But there was better news from the country’s largest business survey which showed that export orders with British firms rose strongly in the first three months of 2013 and confidence about the next 12 months picked up.
The Markit PMI survey suggests that manufacturing exerted an even bigger drag on growth between January and March than it did in the fourth quarter of 2012, when it accounted for a third of the economy’s 0.3 percent contraction.
“The onus is now on the far larger service sector to prevent the UK from slipping into a triple-dip recession,” said Rob Dobson, senior economist at Markit.
Official GDP data for the first quarter won’t be released until April 25 but the evidence so far suggests a strong risk that Britain will record a second consecutive quarter of contraction – the technical definition of recession.
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