Tension with Russia has a negative effect on the UK's manufacturing sector

Manufacturing growth slows down in August

The performance of UK manufacturing sector in August was at its lowest point in the past 14 months, new figures have revealed.

The CIPS/Markit purchasing managers' index survey rated the manufacturing sector’s performance as 52.5, down from 54.8 a month earlier but still above the 50 threshold indicating growth.

The authors of the survey believe geopolitical tension, especially the conflict in Ukraine and resulting sanctions towards Russia have a negative effect on the UK’s economy, threatening the recovery process.

"It is noticeable that where export orders were reported to have risen, companies mainly linked this to demand from North America, Asia and the Middle East, as opposed to our European partners," said Markit senior economist Rob Dobson, explaining that Russia is still one of the most important trading partners of the UK.

Dobson said it now looked certain that the manufacturing sector will provide a lesser contribution to the UK economic recovery story than at the start of the year, when the headline index figure peaked at above 57.

CIPS chief executive David Noble noted that growth in output, new orders and employment all reduced to a more pedestrian level.

He said: "UK manufacturers were walking rather than running in August as the sector's performance fell to a 14-month low and growth began to slow further."

The survey expects further slow-down of new export orders, and limited creation of new businesses and jobs.

The downbeat survey will also give Bank of England policymakers more food for thought this week as they consider whether to raise interest rates for the first time in more than five years.

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