Manufacturing in Britain shrank fastest in three years in May: study

Britain's manufacturing sector shrank the fastest in three years in May, signalling the economy was still mired in recession and economists say this might brighten the prospect of the Bank of England giving a monetary shot in the arm to industry.

The Markit/CIPS PMI, which factors in output, orders and employment in the sector, was down to 45.9 last month from 50.2 in April; a number below 50 indicates contraction.

Weakness was widespread as both domestic and foreign demand dried up, showing that the euro zone crisis was not the sole factor responsible for the poor performance.

According to Rob Dobson, senior economist at Markit, the manufacturing sector "took a sudden sharp turn for the worse" in May.

The data showed manufacturing output down by 1 per cent in the second quarter, suggesting Britain would continue to be in recession for the immediate future at least, he added.

This comes as the first contraction in six months, and is much worse than what the economists had suspected, with an average forecast of a fall to 49.7. The survey is followed widely by policymakers, including those at the Bank of England.

Output, orders and employment were all down sharply, and the new orders measure crashed to 42, the lowest level since March 2009.