U.K. Manufacturing Slumps to Record Low

The UK manufacturing sector contracted much more sharply than expected in September, as activity levels wilted to their lowest level in 17 years. Data from market sources recently showed that the Purchasing Managers Index for the UK's manufacturing sector dropped to a reading of 41 in Sept. from a downwardly revised 45.3 in August. That's the lowest reading since the series began in 1992. That outcome's significantly weaker than expected, with economists Dow Jones Newswires surveyed recently estimating that the PMI would fall to 45. A reading above 50 indicates the sector is expanding, while a reading below 50 indicates it is contracting. The sharp contraction in manufacturing activity makes it more likely that the Bank of England will cut interest rates in the near term to offset slowing growth. Order books and the employment index also dropped to the lowest levels on record, hit by slackening demand and the high cost of credit, market sources said. However, although manufacturing activity weakened, data showed that output prices eased for the first time this year.