U.K. Manufacturing Index Shows March Contraction, Markit Says

U.K. manufacturing shrank for a second month in March as “lackluster” demand at factories weighed on economic growth, Markit Economics said.

A gauge of factory activity rose to 48.3 from 47.9 in February, Markit and the Chartered Institute of Purchasing and Supply said today in London. Economists had forecast an increase to 48.7, according to the median of 28 estimates in a Bloomberg News survey. A reading below 50 indicates contraction.

The reading places the average for the first quarter at 49, suggesting manufacturing won’t shield the economy from a triple-dip recession. The Bank of England will probably hold its target for bond purchases at 375 billion pounds ($571 billion) this week as officials assess Britain’s ability to weather headwinds from Europe and the domestic fiscal squeeze.

“U.K. manufacturing exports have been hit directly not only by the problems in the euro zone, but also by strong competition overseas,” Markit Chief Economist Chris Williamson said in the report. “Activity in manufacturing has fallen at the fastest pace since October and the absence of new orders brings little hope of an uplift in spring.”

The Markit report showed that factory payrolls declined for an eighth month in March. New export orders shrank for a 15th month amid weak demand from Europe and “strong competition” in the U.S. and South Asia, according to the report.

A separate release in the euro area showed a manufacturing gauge at 46.8. That compares with an initial estimate of 46.6 on March 21. The index in Germany, the region’s largest economy, was at 49.

Chinese Managers

The Purchasing Managers’ Index for China rose to 50.9 last month, an 11-month high, from 50.1 in February, the National Bureau of Statistics and China Federation of Logistics and Purchasing said on April 1. A separate gauge from HSBC Holdings Plc and Markit Economics rose to 51.6 in March from 50.4.

The U.K. economy will avoid a triple-dip recession as exports propel a “modest” recovery, the British Chambers of Commerce said today. The pound’s 4.5 percent drop on a trade-weighted basis since the start of the year can benefit manufacturers by giving them scope to charge less on goods sold abroad.

London-based Smiths Group Plc, a maker of airport body-image scanners, said March 20 that revenue from emerging markets rose 9 percent, and that it will focus on investments in “high-growth” markets.

The Bank of England will vote for no change to its bond-purchase program, according to the median estimate of 37 economists in a Bloomberg News survey. The bank will also keep its key interest rate at a record low of 0.5 percent Officials, a separate survey showed. It will announce their decision on April 4 at noon in London.

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