Is manufacturing losing momentum?

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The manufacturing PMI released this morning shows something of a loss of momentum in the sector, dropping from 54.0 in March to 51.9 in April. This builds on the picture we saw in official statistics released earlier this week, which showed that manufacturing grew by 0.1% in the first quarter of 2015.

AprilPMI 

Although the PMI remains firmly positive – and it has been for twenty five months now – today’s number marks a seven-month low as companies reported a falling volume of overseas orders. The turnaround in export growth we saw at the back end of 2014 appears to have fizzled out.

That said, the UK consumer remains as tenacious as ever – fuelled by low inflation and an improving situation on wage growth. This means domestic demand and the consumer goods sectors are still heading in the right direction.

And other indicators look positive too. In particular, manufacturing employment increased for the twenty fourth consecutive month in April, something that wouldn’t be happening if manufacturers weren’t confident about longer term prospects.

Still, this is another reminder that the next government must focus on the right foundations for economic growth: better support for growing businesses, more reliable and resilient infrastructure, a more productive and flexible workforce and a lower cost of doing business (blog to come).

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