(RTTNews) - UK’s manufacturing purchasing mangers index deteriorated to a nine-and-a-half year low in July, continuing to remain in a contraction phase, a survey by Markit Economic showed Friday. Moreover, the PMI reading was lower than analyst expectations.

The CIPS/ Markit PMI fell to 44.3 in July, continuing the contraction phase of the past three months. The reading came in below analyst estimate of 45.5.

The headline reading reflected deterioration in domestic markets and a surge in input and output price inflation. New orders also declined at a fastest pace since 1998. The new orders reading was 40.5, as companies cited weaker demand from clients. New order volumes were also affected by housing and credit crises, along with increased competition from low-cost foreign producers.

Output levels further fell in the month as delay in the supply of raw materials increased and there was a fall in demand. The report said input prices reached a record high in the month, with the index standing at 63.1. This reflected increase in prices of consumer, intermediate and investment goods. Oil prices remained the principal factor for pushing up purchasing costs.

Meanwhile, manufacturers passed on higher costs to consumers in the form of higher transportation and distribution charges. Manufactures also indulged in job cutting to cover increased costs. Job losses were recorded for the past four months. The employment index reading fell to 43.3, with employment showing the fastest pace of decline since 2001.

Backlogs of work fell at the fastest pace since 1999. The backlog index was 39.5 in the month, as companies reported diverted spare capacity to meet existing contracts.

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Posted in Categories: Economy, Releases, Stocks, UK.

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