UK Manufacturing slows to lowest point in a year

The survey adds to a body of evidence which suggests that the worst of the recession may be over as key measurables are falling less sharply than before. However, manufacturing trade group EEF has still said that manufacturing is in the sharpest downturn ever recorded.

The new survey found that manufacturing PMI increased to 45.4 in May, up from the revised figure of 43.1 the previous month. The latest figure represents the third consecutive rise in three months, but is still below the key figure of 50, which is the dividing line between an expanding and contracting sector.

"Today's data will bolster hopes that the UK economy may recover more swiftly than had previously been expected -- indeed, it is possible that the economy may even start growing again before the end of this year," said ING economist James Knightley.

"However, with debt levels high, unemployment rising, and sterling now picking up again -- ahead of a significant improvement in global demand -- any recovery is likely to be extremely fragile," he continued.

The EEF said on Monday it expected manufacturing output to fall by a record 11 percent this year, and its second-quarter output index fell to a record -52 from Q1's -39.

Nonetheless the EEF said that manufacturers expect the pace of decline to ease markedly in the coming three months, which indicated the inventory cycle was coming to an end.

"The automotive and metals sectors are close to the bottom of the stock cycle," said EEF head of economic policy Lee Hopley. "However, the timing of an upturn is increasingly uncertain."

ORDERS FALL SLOWS

CIPS/Markit's new orders index rose to a 14-month high of 48.9, having gained almost 10 points since March. That lifted the orders-to-inventory ratio -- a lead indicator of the production cycle -- to its highest level in almost three years.