Manufacturing contracts for first time in three years

The closely watched Markit/CIPS UK Manufacturing purchasing managers’ index showed a reading of 49.2 in April - the first time the index has fallen below the critical 50 mark since March 2013. A reading below 50 signals falling output.

The report warned over an “atmosphere of deep unease” among the factory supply chain, which saw new orders slump for the fourth month in a row and job losses mount.

The reading, which fell from a downwardly revised 50.7 in March, comes as the sector is being hit by uncertainty caused by the vote on Britain’s membership of the EU, which is compounding already tough conditions caused by a global economic slowdown and the recent oil and commodity price rout.

Official figures last week revealed Britain’s economic growth slowed to 0.4% in the first quarter from 0.6% in the final three months of 2015, driven in part by a poor performance from the manufacturing industry.

The report showed manufacturing jobs were cut for the fourth straight month, with the rate of decline the fastest since February 2013.

Markit said recent data suggests there have been close to 20,000 job losses in the sector over the past three months.

David Noble, group chief executive at the Chartered Institute of Procurement and Supply (CIPS), said: “Recent fears over a stall in the UK’s manufacturing sector have now become a reality and driven the steepest decline in the manufacturing PMI for three years.

“An atmosphere of deep unease is building throughout the manufacturing supply chain, eating away at new orders, reducing British exports and putting more jobs at risk.”

He added the manufacturing industry was set for a “nervous few months”.