Disappointing manufacturing PMI figures point to weaknesses across the sector - ITEM Club - Ernst & Young - United Kingdom

Disappointing manufacturing PMI figures point to weaknesses across the sector - ITEM Club

Nida Ali, economic advisor to the Ernst & Young ITEM Club, comments on today’s PMI manufacturing figures:

• Disappointing manufacturing PMI figures point to weaknesses across the sector
• The fall in new orders suggests this trend will continue in the months ahead
• The outlook remains uncertain and downside risks continue to dominate

“Disappointing manufacturing PMI figures point to weaknesses across the sector. However, given that the index improved sharply in August, a modest decline in September is perhaps not that surprising. 

“The fall in new orders is particularly worrying as it suggests that this trend is likely to continue in the months ahead. The build-up of price pressures on the back of higher food, oil and commodity prices will also add to the squeeze on manufacturers' profit margins.

“The outlook is still very uncertain and downside risks continue to dominate. The Eurozone crisis is weighing heavily on the manufacturing sector through various channels. Weak export demand from Europe and low business confidence is discouraging firms from investing. And the possibility of a further escalation of the crisis cannot be ruled out, which could further dent export demand and confidence.”