We’re all doomed, doomed I tell you …
The Purchasing Managers’ Index results for manufacturing are seriously bad news. It’s been clear for nearly a year that Plan A’s credibility depends upon the continued success of manufacturing, which has been the one bit of light in the pervading economic gloom. Last month’s Index was disappointing, with Markit, the company that produces the Index, noting a “steep deterioration.”
This month, the Index shows a contraction for the first time in two years, job losses for the first time in more than a year and “near stagnation” in output. The figures for new business – the leading edge of what is a leading indicator – are especially worrying, as they are down for the second month running. This is entirely down to domestic conditions as new export business rose again, with US, Australasian and Asian markets particularly important.
Of course, it is good that export markets are still there for us to take advantage of, and today’s downward revision of their GDP forecast by the CBI would have been even worse without this factor. But when our hopes ride on export markets we aren’t in command of our own fate. Even if the Eurozone’s problems are resolved and the US solves its debt crisis both seem set on policies that will inevitably shrink these key markets. If that happens we may all look to Private Frazer for guidance.