British Manufacturing Sector Suffers From Weak Demand, Purchasing Managers' Index Down To 44.3

London, England (AHN) - The purchasing managers' index in the U.K. dipped for the third consecutive month, declining from 45.9 in June to 44.3 in July. The figure was lower than analysts forecast and is the lowest monthly data since December 1998.

The figures indicate the U.K., like many developed western economies, is about to enter into recession. For Britain, it would be its first entry in almost 20 years.

Hetal Mehta, economic advisor to Ernst and Young's ITEM Club, quoted by the U.K. Telegraph, said, "This, combined with a weak GDP figure for Q2, raises the possibility that the economy as a whole could see a contraction in Q3."

The lackluster performance of the manufacturing sector was caused by weak demand in the domestic and export markets and the soaring cost of energy and raw materials. Orders and output plummeted sharply, but the output prices index went up at its highest level in nine years as producers tried to pass on their escalating costs to buyers.

The PMI index was sourced from a survey by the Chartered Institute of Purchasing and Supply. The institute collects monthly data on prices, employment, orders and output from manufacturers. An index reading below 50 is an indicator of recession.