Pressure mounted on the Bank of England to pump further stimulus into the economy after figures published this morning showed that Britain’s manufacturing sector contracted at its fastest pace for more than three years during July.
The purchasing managers’ index (PMI) report compiled by Markit and the Chartered Institute of Purchasing & Supply (Cips) dropped to 45.4 last month from 48.4 in June, with any reading below 50 indicating contraction.
The PMI reading was the lowest since May 2009 and has dented hopes that the UK could have pulled itself out of recession during the summer.
Howard Archer, chief UK and European economist at IHS Global Insight, branded the Cips figures as “absolutely dreadful”.
He added: “The July purchasing managers’ survey is massively disappointing and worrying, indicating that the manufacturing sector’s problems are currently running deep.”
Analysts said the down-beat reading added to the pressure on the Bank of England’s monetary policy committee (MPC), which begins a two-day meeting this morning to decide if it will lower interest rates or pump further cash into the economy.
The MPC’s decision will be announced tomorrow.
The figures come after PMI data in China revealed the slowest growth in manufacturing in eight months while eurozone figures fell to a 37-month low, with only Ireland bucking the trend out of eight single-currency countries.