Manufacturing 'stuck in the doldrums' at near-three-year lows

UK factory output was stuck in the "doldrums" at close to three-year lows in March as manufacturers cut jobs for the third month in a row, according to a report.

The closely-watched Markit/CIPS manufacturing purchasing managers' index showed the sector barely remained in growth territory, with a reading of 51 last month, edging up from 50.8 in February, amid a fragile UK economy and global slowdown. A reading above 50 indicates expansion.

It said the rise in February was the slowest expansion in the sector for nearly three years, while manufacturing jobs fell for the third straight month.

This left the survey's first quarter reading at 51.6, equalling the lowest level since the report's data first moved back above the neutral 50 mark in early 2013.

Growth in the sector was marked by domestic new business wins, while new export business also decreased for the third straight month in March.

Firms blamed weaker global growth, particularly from US and European trading partners.

Other businesses cited declining business from the Middle East, due to sliding oil and gas markets.

Rob Dobson, senior economist at Markit, said: "The UK manufacturing sector remained in the doldrums during the opening quarter of the year.

"Although March saw modest improvements in the trends for production and new orders, industry is still hovering close to the stagnation mark and will struggle to make a meaningful contribution to the next set of gross domestic product growth figures."

"New export business continues to disappoint, mainly due to softer global economic growth.

"Although the drop in sterling may add some bounce to export performance in coming months, the exchange rate is likely to cause as many issues on the cost side through higher import prices as it aids for demand.

"This could apply an unwelcome additional strain to manufacturers' margins, coming at a time when many are still having to pass on lower commodity prices to maintain competitiveness and alongside the introduction of the National Living Wage."

IHS Global Insight chief UK and European Economist Howard Archer said: "About the best that can be said for this survey is that it is a tiny step in the right direction for manufacturers.

"The purchasing managers index was still at its second-lowest level since April 2013 in March as it could only edge up from February's 34-month low.

"This suggests that the manufacturing sector will have struggled to eke out any expansion in the first quarter."