Export orders for Britain's manufacturers have collapsed at their fastest rate in almost three years, a key survey has found, raising fresh fears about the state of the economy.
© UnknownManufacturing output expanded for the fifth consecutive month in April, but at the weakest pace since December.

Poor export orders pulled activity in the UK's key manufacturing industry down to its slowest rate of growth in four months in April, according to the closely-watched purchasing managers' index (PMI), as companies reported fewer orders across the board - from Europe, the US and Asia.

Foreign demand for British goods has now deteriorated for two of the past three months as export orders dropped at their fastest pace since May 2009. The sharp decline in exports caused total new order books to shrink for the first time in five months.

The overall PMI reading fell from 51.9 to 50.5 for April, worse than forecasts of a decline to just 51.5 and the slowest pace of expansion since December.
© Markit/Chartered Institute of Purchasing & Supply

Economists said the figures, from Markit and the Chartered Institute of Purchasing & Supply, came as a blow following the economy's slide back into recession in the first quarter.

Howard Archer, at IHS Global insight, added: "[They are] an early blow to hopes that the economy will return to growth in the second quarter, especially as the Queen's Diamond Jubilee will hold back overall economic activity in the quarter.

Manufacturing output shrank by 0.1pc in the first three months of the year, according to the Office for National Statistics (ONS), and has now failed to deliver any economic growth in a year.

The weakness of the sector, which is supposed to be thriving on the back of the greater competitiveness provided by a weak pound, contributed to the 0.2pc first quarter economic contraction that confirmed the UK's first double dip since 1975.

The official ONS figures appear to show that activity is weaker than the PMI data suggest. The PMI manufacturing data pointed to a clear expansion in the sector in the first quarter, causing some economists to question the ONS numbers. Markit appeared to ignore the ONS data, saying: "The UK manufacturing sector growth softened at the start of the second quarter, after making a solid start to the year."

Raising further concerns, growth in the sector in April was held up by a reduction in backlogs of work, which fell for the fifteenth month in a row and "at a faster-than-series-average pace". "Where an increase in output was reported, this partly reflected work on existing contracts," the PMI said.

Worryingly, export weakness was not confined to the eurozone, where a slide into recession this year is expected to drain away demand.

Lee Hopley, chief economist at EEF, the manufacturers' organisation, said: "The ability of UK manufacturers to tap into growing global demand has been an important source of growth and, without this engine, the uncertainty about whether we can regain significant momentum behind the recovery will remain."

Ms Hopley pointed out that the sector did expand for a fifth straight month, that cost pressures are easing and the industry is still recruiting.