Instant View - UK manufacturing shrinks in March, credit grows in February

LONDON (Reuters) - Britain's manufacturing sector shrank in March, according to a monthly survey by Markit.

Separate data from the Bank of England showed overall lending to consumers grew although the number of mortgage approvals fell.


- The Markit/CIPS manufacturing purchasing managers' index came in at 48.3, only slightly above February's shock reading of 47.9, and a touch weaker than the consensus forecast.

- The output component of the survey fell in March at its fastest pace since October.

- Consumer credit rose by a net 0.6 billion pounds in February, higher than a 0.5 billion-pound increase in January.

- Mortgage lending grew by 0.9 billion pounds in February, stronger than January's growth of 0.3 billion pounds.

- Mortgage approvals numbered 51,653 in February, the lowest since September and down from 54,187 in January.



"March PMI data indicate that the UK manufacturing sector contracted again during the opening quarter of 2013, to remain a drag on the broader economy. These weak numbers may be sufficient to tip the balance and convince more members of the MPC to consider additional QE at their meeting next week.

"The onus is now on the far larger service sector to prevent the UK from slipping into a triple-dip recession. 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.

"Manufacturers are still feeling the impact of subdued demand in domestic and export markets, as consumers and businesses rein in spending and the Eurozone remains in what seems to be a perpetual cycle of crisis. Cost-caution is also leading to manufacturing job losses, destocking of inventories and a reluctance to invest, all of which will exert a drag on the broader economy in coming months."