Thursday, October 1, 1998 Published at 09:39 GMT 10:39 UK
Business: The Economy
UK exports in steep decline
Falling exports are harming UK manufacturers
The UK's manufacturing sector is falling deeper into recession, according to the latest survey of Purchasing Managers from the Chartered Institute of Purchasing and Supply (CIPS).
The news comes as another forecast, from Business Strategies, predicts 350,000 job losses in manufacturing in 1999.
The decline in export orders was the largest in the history of the CIPS survey, with the September PMI export orders index at 38.6. Any figure below 50 indicates a contraction.
Demand for orders in the Far East has continued to fall, while the problems in Russia put further pressure on exports.
Domestic orders also fell, because of the inflow of cheap imports and deteriorating consumer confidence, but the rate of decline eased.
The overall manufacturing sector index was negative for the sixth month in a row, but the September figure showed the decline was less steep, at 46.4, compared to 45.3 in August.
Jeremy Hawkins, of Bank of America, commented, that "this may help to boost speculation about a Bank of England rate cut next Thursday and make for a little added downside pressure on the pound," he said.
On the financial markets the pound fell to its lowest level against the Deutschmark since October last year.
Job losses mount Manufacturing employment also fell for the eighth month in a row, with 20% of firms reporting jobs losses, as opposed to 9% who took on more staff. The employment index was down to 44.4, as opposed to 45.2 in August.
And the economic consultancy Business Strategies has forecast 350,000 job losses in manufacturing next year.
It says the economy's growth rate will shrink to 0.7%, from 2.2% this year.
And it predicted unemployment would rise to 5.2% from the current level of 4.8%.
But the Northeast, West Midlands, and Yorkshire and Humberside will be in full-blown recession, with growth actually turning negative in those regions.
Business Strategies says that no region of the country will be immune, with weaker consumer spending hitting sectors like retailing and restaurants.
"Manufacturers are bearing the brunt of the economic difficulties, but consumers are getting frightened," commented research director Neil Blake.
Falls in equity prices and house prices will particularly affect consumers in the Southeast.
The consultancy said that the pound needed to be much lower against the Deutschmark, but warned that global turmoil could still derail growth.
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