-UK Manufacturing PMI down for second month running
-Sharper falls in output and new orders, as export demand remains weak
-Cost-caution leads to job losses, stock depletion and lower purchasing



British manufacturers pulled in their horns a little bit more in October, with some reports of lower demand in Asia and the continuing crisis in the Eurozone leading to the second fastest pace of decline in new export orders in just over a year.

Thus, the UK manufacturing sector purchasing managers´ index (PMI) for the month of October retreated to 47.5 points, after a reading of 48.1 (Preliminary: 48.4) in the month before.

The consensus estimate had been for a reading of 48.

The above data marks the sixth consecutive month of contraction in the sector, with the rate of decline in production volumes the second-sharpest seen during the past three-and-a half years. The main factor underlying lower output was a further reduction in new work received.

Total new orders fell for the seventh month running and at a faster pace than in September.

"While the road to an export-led recovery is still blocked by the ongoing difficulties in the Eurozone, it is concerning to hear further reports of the global slowdown hurting trade with other regions such as Asia," said Rob Dobson, Senior Economist at survey compiler Markit.

By sectors, consumer goods were a pocket of strength, as it bounced back strongly after September´s fall. Conditions, however, deteriorated in intermediate and investment goods.

Signs of spare capacity also encouraged some manufacturers to reduce employment.

Manufacturers remained cost-cautious overall, leading to lower levels of purchasing and further depletion of inventory holdings, with the rate of reduction in input buying volumes accelerated sharply and was one of the fastest signaled during the past three-and-a-half years.

AB

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