Manufacturing shrank in June
New orders continued to fall for the second straight month in June
By CFOWorld staff | CFO UK | Published 09:45, 02 July 12
Manufacturing shrank in June, new data showed on Monday, adding to evidence that the second quarter is worsening and raises pressure on the Bank of England to begin another round of quantitative easing.
New orders continued to fall for the second straight month in June, according to the Markit/CIPS purchasing managers' index (PMI)
The index rose to 48.6 last month from May's three-year low of 45.9, beating expectations for a more modest climb to 46.5, but it sat at below the 50 mark that divides growth from contraction for its second month.
There's no denying that the second quarter as a whole is looking weaker than the first quarter," said Rob Dobson, senior economist at data compiler Markit.
Manufacturing output may have contracted by at least 0.5 percent and therefore acting as a substantial drag on the economy for the fourth successive quarter.
The economy contracted 0.3 percent in the first three months of the year and having shrunk at the end of 2011 it met the technical definition of recession.
With economists seeing tepid growth ahead at best, and only a mild bounce next quarter from London's hosting of the Olympic Games and the subsequent tourism and ticket sales, the Bank is widely seen restarting its programme of quantitative easing asset purchases.
The Bank is expected to top up the £325 billion of cash it has already pumped into markets with another £50 billion when it meets on Thursday as falling inflation gives it more scope to support the battered economy.
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