“The data so far this year point to manufacturing output falling by as
much as 0.5pc, meaning a strong rebound is needed in March to prevent the
sector from acting as a drag on the economy as a whole in the first quarter,”
he said.

Bad weather at the end of January and a larger than expected disruption caused
by the Chinese New Year holiday on global trade flows saw
new orders fall for a second successive month, Markit said
.

The degree of job shedding was the fastest for 40 months, it added, with
large-sized enterprises making the steepest cuts.

Analysts said sterling, which has already fallen around 7.5pc against the
dollar this year, could fall further if services PMI data next week also
painted a bleak picture of the UK.

“The pound is extremely sensitive to domestic fundamentals right now,” said
Kathleen Brooks at forex.com. “If we see a miss in the service sector PMI
when it is released on Wednesday, this could be the trigger for a sharper
move lower in the pound.”

Britain’s services sector powers more than three-quarters of the UK economy,
compared with 11pc for manufacturing.Some analysts said the data could
persuade Bank of England policymakers to restart the printing presses at
their monthly interest rate meeting next Thursday.

David Tinsley at BNP Paribas said that there was “about a 45pc chance of
more QE next week”.

However, Mr Williamson added that the weaker pound and a rebound in orders
following the recent bad weather spell could help exporters recover in
March.

Separate data by Markit on Friday showed that the downturn in the eurozone’s
manufacturing sector continued in February, despite a stronger performance
by Germany, Europe’s largest economy.

Markit’s final eurozone manufacturing PMI came in at 47.9 in Febraury,
compared with an initial estimate of 43.8, as business conditions
deteriorated for a nineteenth successive month.

Mr Williamson said the data indicated that eurozone GDP would fall for a
fourth successive quarter in the first three months of the year, and that
the divide in eurozone manufacturing trends continued to “diverge
strongly”.

“German producers reported the first overall improvement in business
conditions for a year, contrasting with steep downturns in France, Spain and
Italy,” he said.

“The combination of a revival in export orders and resilient domestic demand
has helped propel Germany’s growth so far this year, while deteriorating
domestic demand is holding back the economies of France, Italy and Spain. “

The unemployment rate in the eurozone also touched a fresh high of 11.9pc in
January from 11.8pc in December. More than 19m people are now out of work in
the 17-nation bloc, Eurostat said.

UK manufacturing shrinks unexpectedly in February – Telegraph.co.uk
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