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Friday 19th September 2014
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UK Industry Export Orders Hit Euro Headwinds

Monday, 1st September 2014 12:02

There is increasing evidence that the UK's economic recovery is coming under pressure from outside influences.

New manufacturing order growth plunged in August, according to the keenly-awaited CIPS/Markit Purchasing Managers' Index (PMI), with overall activity at a 14-month low.

The report highlighted concerns that UK industry was not immune to the impact of the conflict between Ukraine and Russia - a stand-off that has already resulted in tit-for-tat sanctions between Russia and the West.

The sanctions have already been blamed for knocking confidence and output in the euro area - the UK's biggest trading partner - and especially in Germany which relies on Russia for much of its energy supplies.

Markit senior economist Rob Dobson said: "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."

The PMI fell to 52.5 in August - its lowest level since June last year and below forecast - from July's downwardly revised 54.8.

While still holding above the 50-point threshold denoting growth, the PMI suggested the onus will fall on consumers to keep driving Britain's economic upturn in the second half of the year.

The fall in the headline index was driven by the new orders component, which suffered its biggest one month drop in two years.

Factories also hired  staff at the slowest pace since last June.

A separate PMI for eurozone manufacturers also showed growth eased more than first thought while the UK manufacturing body the EEF also issued a warning about exports and cut its growth forecast.

Its report cited concerns over the "flagging" eurozone economy and stronger sterling exchange rate.