Recession deepens as order books bare

New figures showed the sector took a turn for the worse after a shock decline in production, underlining the empty rhetoric of the coalition government.

It deals a body-blow to hopes of an early end to the double-dip recession and raises the spectre of more "quantitative easing" - printing money - by the Bank of England.

The closely-watched Purchasing Managers' Index indicator where a reading above 50 represents growth, fell to 45.9 in May from 50.2 the previous month.

It is the second-steepest fall in the survey's 20-year history and came as new orders dropped at the fastest pace since March 2009.

RBS economis Ross Walker said: "This is a collapse, this is a huge decline. We're still a little bit above the lows we hit in the depths of the 2009 recession but we're heading that way sharply."

Markit which published the figures said the collapse reflected the increasing weakness of the British domestic market as well as the eurozone crisis.

It also found manufacturers were struggling to replace orders from Europe with work elsewhere, including the US and Asia.

Unite said it was a "damning indictment" of government economic policy and the latest figures make "shocking reading."

Assistant general secretary Tony Burke warned that confidence is being drained from the economy.

"Our members are telling us that companies are 'battening down the hatches' with order books beginning to collapse at a faster rate than export orders."

GMB national secretary Phil Davies said: "The government has clearly stalled the economy and the haemorrhaging of jobs continues.

"What we need to see from this government is another U-turn - this time over economic policy, to promote growth."

tonyp@peoples-press.com