UK manufacturing expanded at the slowest pace in 17 months in April, limiting the scope for a near-term rate hike, a private survey showed Tuesday.
Elsewhere, the central bank data revealed that consumer credit grew at the slowest pace since late 2012 in March.
The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers’ Index for manufacturing fell to a 17-month low of 53.9 in April from 54.9 in March. The score was forecast to fall slightly to 54.8.
Nonetheless, the indicator signaled expansion in each of the past 21 months.
The survey suggested slowdown in both output and new orders growth, while business optimism slid to a five-month low. Export business grew at the slowest pace in ten months.
Falling backlogs of work, supply-chain constraints and rising stocks of finished goods signal that output growth will remain subdued in months ahead, the survey showed.
The rate of job creation eased to the weakest in 14 months. Staffing levels were raised in the intermediate and investment goods sectors, while the consumer goods industry reported its first job cuts since February 2017.
On the price front, the rate of input price inflation faced by UK manufacturers remained elevated in April, despite easing to a nine-month low.
At the same time, the rate of output charge inflation slowed for the third straight month to the slowest since August 2017.
While adverse weather was partly to blame in February and March, there are no excuses for April’s disappointing performance, making the chances of a near term hike in interest rates by the Bank of England look increasingly remote, Rob Dobson, director at IHS Markit, said.
The Bank of England will want to wait until it becomes clear that there is not a more fundamental slowdown in the economy taking place before tightening policy again, Paul Hollingsworth, Capital Economics’ economist, said.
As it happens, much of first quarter’s weakness will prove temporary, and the next hike is expected to come in August, the economist added.
Monthly data from the BoE revealed that consumer credit rose only GBP 0.3 billion following February’s GBP 1.7 billion growth.
The latest growth was the weakest since November 2012. Economists had forecast an increase of GBP 1.4 billion.
The number of mortgages approved in March decreased to 62,914 from 63,781 in February. This was the lowest since December and below the forecast of 63,000.
Meanwhile, secured lending increased by GBP 4 billion, which was faster than a GBP 3.9 billion rise posted a month ago and the expected growth of GBP 3.6 billion.
Borrowing by non-financial businesses climbed to GBP 4 billion in March. This was driven by lending to businesses in the ‘Public administration and defence’ industry.