UK manufacturing sector facing 'bleak' outlook after worst month in over two years

Manufacturers face a “bleak” outlook after suffering their worst month in more than two years in October.

The UK's manufacturing sector scored just 46.2 last month in the purchasing managers’ index (PMI) survey, according to S&P Global and the Chartered Institute of Procurement & Supply. It means that the sector shrank for the third month in a row - anything below 50 is considered a contraction - and notched up its worst score since the early days of the pandemic.

The latest result compares with a reading of 48.4 in September as companies said the UK market was weaker, their customers had already built up high levels of stocks and clients lacked confidence.

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Rob Dobson, director at S&P Global Market Intelligence, said: “UK manufacturing production suffered a further decline at the start of the fourth quarter, with the sector buffeted by weak demand, high inflation, supply-chain constraints and heightened political and economic uncertainties. While the downturn has lessened the pressure on prices, the weak pound and high energy prices mean elevated cost inflation remains a prime concern for manufacturers.”

Businesses were helped somewhat by a slowdown in rising costs, as growth input costs and output charges slowed. However, both remained above historical averages. Price rises were reported for chemicals, electronics, energy, food, metals, packaging, paper and timber. Companies put the rises down to inflation, the drop in the value of the pound and the conflict in Ukraine.

Mike Thornton, national head of manufacturing at audit and business advisory group RSM UK, said: “The October manufacturing PMI paints a bleak picture, and, with the exception of the 2020 lockdown, when manufacturing stopped almost entirely, this is the lowest level we’ve seen since the 2008 financial crisis. The future output index has also taken a sharp fall from 66 to 63.1. This is particularly concerning, as it demonstrates that orders are declining steeply, and have been since Russia invaded Ukraine. As the new export orders index also fell, to 40.6 in October, it’s looking unlikely that firms will be able to rely on external demand to supplement the weakening domestic market,” he added.



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