British manufacturers slashed jobs and output at a record pace in February as export orders plunged, a survey showed today.
The CIPS/Markit purchasing managers index fell to 34.7 in February from 35.8, below analysts' forecasts for a more modest easing to 35.
February's index was only a touch above a record low struck in November and it has been below 50 - meaning activity is contracting - for the last 10 months, the longest such run since 2002.
The survey will add to expectations the Bank of England will cut interest rates by half a percentage point this week to a record low of 0.5 percent, as policymakers prepare to start increasing the supply of money to boost the economy.
Plunging demand drove companies to slash output and jobs at their fastest rate since the survey began in 1992. It also led to a drop in factory gate prices for the second time in three months and at the sharpest rate in seven years.
The employment index fell to 33.3 in February from 34 in the previous month.
"The labour market exhibited exceptional weakness during the month, with the PMI survey consistent with around 30,000 jobs being lost per month," said Markit senior economist Rob Dobson.
Unemployment in Britain climbed to just below 2 million in the three months to December, according to the latest official data, and BoE policymaker David Blanchflower reckons it may top 3 million in 2010.
The survey also showed that sterling's weakness on the foreign exchanges has failed to provide any support to exports, as Britain's major trading partners fell victim to a global economic downturn.
Markit said 38 per cent of respondents reported a decline in new export business last month.
Reuters