Forex News – UK manufacturing contracts for second month

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Manufacturing activity in the United Kingdom contracted for the second month from October to November based on Markit research.

Manufacturing orders and output shrank fell on weak global demand and due to a slowing European growth. Europe is a major destination for Britain’s exports. Data released today also show the euro zone’s manufacturing activity has slowed down.

The decline in activity amid a worsening debt crisis in the euro zone forced companies to cut jobs at the fastest rate in more than two years.

The Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) fell to 47.6 in November, its lowest level since June 2009, from an upwardly revised 47.8 in October.

The reading was marginally above forecasts for a reading of 47.0.

“The manufacturing engine has run out of steam,” said Rob Dobson, senior economist at Markit. “Output is falling at the fastest rate since early 2009 as order inflows from domestic and overseas markets continue to deteriorate. Jobs are consequently being lost at the fastest rate for over two years as producers seek to scale back operating capacity in line with a darkening economic outlook.”

The OECD warned this week that Britain is heading for a modest recession early next year while the official forecast for UK economic growth next year was slashed to 0.7 percent, from 2.5 percent.

Sterling briefly dipped after the report from 1.5700 to 1.5682 within a few minutes before bouncing back.