UK manufacturing downturn continues as firms hike prices
The UK’s manufacturing sector has continued its contraction for a third month in a row in September and orders declined for a fourth consecutive month, a survey has found.
The S&P Global/CIPS UK Manufacturing PMI scored 48.4 in September, from 47.3 a month earlier. August’s score had been the lowest for 27 months.
Anything below 50 is considered to show that the sector is shrinking.
Firms were also hit by soaring input costs, which led them to hike their own prices at an accelerated rate too.
"September saw new export business contract at the quickest pace since May 2020, with reports of lower demand from the US, the EU and China," S&P Global said.
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"Manufacturers faced weak global market conditions, rising uncertainty, high transportation costs reducing competitiveness and longer lead times leading to cancelled orders," it added.
Contractions were seen across the consumer, intermediate and investment goods industries, with the steepest decline seen in intermediate goods producers.
"With existing headwinds from the cost-of-living crisis likely to be exacerbated by the current volatility in financial markets, growing economic uncertainty and further increases in borrowing rates, the industrial sector is likely to remain in the doldrums during the coming quarter to add to deepening recession risks," Rob Dobson, director at S&P Global Market Intelligence, said.
🇬🇧 #UK's Manufacturing #PMI posted 48.4 in September (Aug: 47.3), below the 50.0 neutral mark for a third straight month. Weak domestic and overseas markets combined with inflationary pressures to curb goods production. Read more: https://t.co/EWyzjhJF4R pic.twitter.com/J6pwkRRgVe
— S&P Global PMI™ (@SPGlobalPMI) October 3, 2022
“The twelve month plus run of confidence in manufacturing output has come to an abrupt end as everyone has returned from the summer break. Even as late as July the PMI index was relatively healthy and manufacturers were still cautiously upbeat,” Simon Jonsson, UK head of Industrial Products at KPMG, said.
“But the economic headwinds of the ongoing squeeze on consumer demand, inflation, and the early signs of recession, have all combined to reduce confidence. This situation will not be improved by the recent volatility in capital markets."
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The UK manufacturing PMI is compiled from responses to surveys sent to purchasing managers in around 650 British manufacturing firms.
“UK manufacturing needs to raise its efficiency to deal with these threats, but raising efficiency will require capital investment. The risk of significantly higher interest rates in 2023 will increase this challenge.”
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