By Ilona Billington
LONDON--The pace of decline in the U.K.'s manufacturing sector was little changed in March from February, which means the performance of the sector in the first quarter of this year was weaker than the fourth quarter of 2012, a survey showed Tuesday.
The data--which showed demand remained subdued, while prices increased and job cuts continued, suggest that the sector likely weighed on output as a whole over the first three months of the year. That means that the services sector, which accounts for 77% of the U.K.'s economy, must post a strong performance in order to avoid a second straight contraction in gross domestic product in the first quarter of this year.
Data firm Markit and the Chartered Institute of Purchasing & Supply's monthly Purchasing Managers Index for the manufacturing sector rose to 48.3 in March from February's 47.9, but remains below the key 50 level which separates expansion from contraction, confirming that the sector continues to shrink.
Markit also said that the average manufacturing PMI for the first quarter was 49.0, below the average 49.2 in the fourth quarter.
Economists surveyed by Dow Jones Newswires last week estimated that the PMI improved to 49.0.
"March PMI data indicate that the U.K. manufacturing sector contracted again during the opening quarter of 2013, to remain a drag on the broader economy," said Rob Dobson, senior economist at Markit.
"The ongoing weakness of manufacturing and the hard to estimate impact of bad weather on first quarter growth suggest that this is still touch-and-go and that any expansion will be disappointing nonetheless," Mr. Dobson said.
The weaker than expected figures also increase the likelihood that the Bank of England could extend its bond-buying programme, otherwise known as Quantitative Easing, when it makes its monetary policy announcement at midday on Thursday.
Economists surveyed last week by Dow Jones Newswires forecast rates and policy will remain on hold.
LONDON--The pace of decline in the U.K.'s manufacturing sector was little changed in March from February, which means the performance of the sector in the first quarter of this year was weaker than the fourth quarter of 2012, a survey showed Tuesday.
The data--which showed demand remained subdued, while prices increased and job cuts continued, suggest that the sector likely weighed on output as a whole over the first three months of the year. That means that the services sector, which accounts for 77% of the U.K.'s economy, must post a strong performance in order to avoid a second straight contraction in gross domestic product in the first quarter of this year.
Data firm Markit and the Chartered Institute of Purchasing & Supply's monthly Purchasing Managers Index for the manufacturing sector rose to 48.3 in March from February's 47.9, but remains below the key 50 level which separates expansion from contraction, confirming that the sector continues to shrink.
Markit also said that the average manufacturing PMI for the first quarter was 49.0, below the average 49.2 in the fourth quarter.
Economists surveyed by Dow Jones Newswires last week estimated that the PMI improved to 49.0.
"March PMI data indicate that the U.K. manufacturing sector contracted again during the opening quarter of 2013, to remain a drag on the broader economy," said Rob Dobson, senior economist at Markit.
"The ongoing weakness of manufacturing and the hard to estimate impact of bad weather on first quarter growth suggest that this is still touch-and-go and that any expansion will be disappointing nonetheless," Mr. Dobson said.
The weaker than expected figures also increase the likelihood that the Bank of England could extend its bond-buying programme, otherwise known as Quantitative Easing, when it makes its monetary policy announcement at midday on Thursday.
Economists surveyed last week by Dow Jones Newswires forecast rates and policy will remain on hold.
