Manufacturing sector reports record drop

The UK's manufacturing sector saw a record drop in employment and production last month.

New survey data, from the Chartered Institute of Purchasing and Supply and survey company Markit, found the purchasing managers' index declined sharply to 34.5, almost hitting December's record low. The figure records whether purchasers in large companies are increasing or decreasing their number of orders, with any number below 50 showing things getting worse.

The recession began to hit bigger manufacturers, as large companies saw a greater drop in orders than their small and medium-sized counterparts.

Factory gate prices dropped at their fastest rate for almost seven years in the face of strong competition, weak demand and lower costs, the survey said.

Roy Ayliffe, director of professional practice at the Chartered Institute of Purchasing and Supply, said the decline of UK manufacturing was reminiscent of the dire conditions in the eighties. “While the recession initially hit SMEs the worst, larger manufacturers - especially those dependent on the automotive and construction sectors - are increasingly struggling. And with bigger firms now in the equation, we are seeing jobs slashed at a record rate as firms try to survive the unrelenting market conditions.”

Rob Dobson, senior economist at Markit Economics, said the index showed the recession had deepened since December as manufacturing production dropped by a further 2%. The survey indicated that about 30,000 jobs were being lost each month, he added.