LONDON (Reuters) - British manufacturing contracted slightly in April after deeper falls in the previous two months, the first major set of data on the second quarter of the year showed on Wednesday.
”I don’t think the UK can buck the global trend for long. Manufacturing will struggle to grow for a while yet. It’s obviously good news it (the PMI) has gone up, but the sector continues to flirt with contraction. The UK’s main trading partner, the euro zone, remains in recession and, whilst exports to other countries are rising, the euro zone does after all still account for 50 percent of UK trade.
“The manufacturing sector will probably weigh on UK growth for a couple of quarters and we think there will be some difficult times to come before Britain returns to sustainable growth, but the relief is that the rate of contraction has at least eased.”
On chances of more quantitative easing before the new Bank of England governor arrives in July:
“The GDP release last week hammered the final nail into that coffin.”
“It’s a relatively decent result. The manufacturing sector is still weak - the PMI remains below the 50 breakeven level - but there is some semblance of stabilisation, which could imply a gentle building of recovery momentum across the economy.”
”It is welcome to see the sector showing signs of stabilising in April. With forward-looking indicators such as new orders and the demand-to-inventory ratio also ticking higher, the sector should at least be less of a drag on broader GDP growth in the second quarter.
”Manufacturers report that the domestic market is just about holding its head above water, but was still a key cause of disappointingly weak demand, while a solid improvement in new export orders was the real surprise.
“April also saw a further easing in price pressures, as input costs fell and selling prices rose at the weakest pace since last November. This provides headroom for the Bank of England’s MPC to extend its accommodative policy stance if GDP growth fails to gain traction in the coming months.”
Reporting by Olesya Dmitracova and Christina Fincher