Steepest Decline In Manufacturing Since 2013

A closely-watched reading of manufacturing activity has recorded its weakest reading for more than three years and pointed to the loss of thousands of jobs.

The Markit/CIPS UK manufacturing purchasing managers' index (PMI) - a survey of purchasing managers in the sector - came in below the crucial 50 mark for the first time since March 2013 in April. A reading below 50 signals falling output.

It (Other OTC: ITGL - news) pointed to uncertainty over spending ahead of the EU referendum in June and the impact of the slowdown in the global economy, with new orders falling for the fourth-straight month.

The report also suggested jobs were being cut at the fastest rate since February 2013 with 20,000 lost over the past three months.

It was released just a week after official gross domestic product figures for the UK economy recorded an overall slowdown in the first quarter to growth of just 0.4% from 0.6% in the previous three months.

David Noble, group chief executive at the CIPS, said: "An atmosphere of deep unease is building throughout the manufacturing supply chain, eating away at new orders, reducing British exports and putting more jobs at risk".

Chief UK and European economist at IHS Global Insight, Howard Archer, said: "This is a worrying and disappointing survey.

"While the UK manufacturing sector has been struggling for some time, the April purchasing managers survey can only fuel concern that mounting uncertainties ahead of June's EU referendum are taking an increasing toll on the economy."

He predicted GDP growth could slow to 0.3% in the current second quarter but warned: "Even (Taiwan OTC: 6436.TWO - news) this could prove optimistic".

The European Commission cut its Eurozone growth forecasts for this year on Tuesday, warning that global risks including the slowdown in China and the danger of Britain leaving the EU were harming economic recovery.

It trimmed its 2016 forecast to growth of 1.6% from 1.7%.

The announcement was made just days after it was announced that the Euro area's economy had recovered to its pre-recession level .