British manufacturing cools before closely fought election
By Andy Bruce and David Milliken
LONDON (Reuters) - British manufacturing growth slowed sharply in April, a survey showed on Friday, underlining the uneven nature of an economic recovery that is at the heart of a national election just six days away.
Separate data showed consumer lending rising sharply, suggesting that the recovery is being driven by spending.
Sterling hit a three-week low against the euro after the Markit/CIPS UK Manufacturing Purchasing Managers' Index, a closely watched monthly business survey, suffered its biggest fall in more than two years.
Coming after a surprising slowdown in growth in the first quarter, the survey will make gloomy reading for Conservative Prime Minister David Cameron and Chancellor George Osborne, who promised a manufacturing revival shortly after coming to power in 2010.
Their Conservative Party remains deadlocked in opinion polls with the opposition Labour party and the recent signs of a slowdown in the economy have complicated the Conservatives' decision to put the recovery at the centre of their campaign.
But separate data from the Bank of England showed households were happy to borrow more heavily. Lending to consumers in March surged at the fastest pace since before the financial crisis, and there was also sharp upturn in business borrowing.
Taken together, the figures suggested Britain's upturn is fuelled by consumption.
Still, many economists expected the recovery to remain solid, blaming a stronger currency and uncertainty around the election for the weakness in manufacturing.
The chief executive of one of Britain's biggest banks said he also expected growth to stay strong, despite uncertainty about the outcome of the May 7 election.
"We are favourable on the UK economy," Lloyds CEO Antonio Horta Osorio told reporters. "It continues to progress at a healthy pace and we continue to expect it to grow between 2.5 percent to 3 percent this year."
While holding above the 50 threshold for growth, the manufacturing PMI fell to a seven-month low of 51.9 from a downwardly revised 54.0 in March, far below all forecasts in a Reuters poll of economists.
"Any signs of rebalancing the economy towards manufacturing and exports remain frustratingly elusive," said Rob Dobson, economist at survey compiler Markit.
Earlier this week official figures showed that economic growth in the first quarter was its slowest since late 2012, prompting Osborne to warn voters not to take recovery for granted.
The BoE data showed consumer lending grew by 1.24 billion pounds in March, the biggest monthly increase since February 2008 and higher than forecast.
There was also a big jump in lending to business in March which was up by 2.72 billion pounds, the largest monthly increase since records began in mid-2011, the BoE.
(additional reporting by William Schomberg and Steve Slater Editing by Jeremy Gaunt)
