Biz conditions deteriorate in UK manufacturing in Nov: S&P Global

Ongoing concerns surrounding the economic outlook, costs and weak demand, meanwhile, led to cutbacks in staffing, purchasing and inventory holdings.

The seasonally adjusted S&P Global UK manufacturing purchasing managers’ index (PMI) posted a nine-month low of 48 in November, from 49.9 in October and below the flash estimate of 48.6. It has registered below the neutral 50 mark in each of the past two months.

Four out of the five PMI components—output, new orders, employment and stocks of purchases—signalled a deterioration in business conditions during November.

Vendor delivery times lengthened, which registered as a positive effect on the headline PMI.

Manufacturing output declined in November, as weaker demand from domestic and overseas clients led to a scaling back of production volumes. Intakes of new business fell for the second month in a row, with the rate of contraction reaching a nine-month high.

Survey respondents linked the declines in output and new orders to delayed investment decisions, cutbacks to new projects due to domestic market uncertainty and rising geopolitical tensions.

Some firms noted that announcements in the UK Budget had led to budgets being re-appraised at manufacturers and their clients alike.

Export conditions also remained tough during November. New orders from overseas contracted for the thirty-first month in a row, reflecting lower demand from the United States, China, the European Union (EU) and the Middle East.

Data broken down by company size suggested that small manufacturers were hit the hardest during November. Small-scale producers saw the steepest declines in output, total new orders and new export business.

Although medium and large manufacturers also saw production and total new orders decline, rates of contraction were comparatively mild.

The outlook for the manufacturing sector remained positive overall in November. Over half of companies (52 per cent, unchanged from October) forecast that production would rise over the coming year, compared to only 11 per cent anticipating contraction (up from 8 per cent).

Planned expansions and diversifications, product launches, hopes for economic recovery and efforts to revive export demand were cited as reasons for optimism by UK manufacturers. Many, however, remained concerned about rising geopolitical tensions, domestic politics and the impact of higher employment costs on future domestic demand.

Manufacturing employment fell for the second time in the past three months in November, with the rate of job losses the quickest since February. Cuts were linked to concerns over rising cost pressures and weak demand.

These factors also encouraged manufacturers to cut back on purchasing activity and stock holdings as part of efforts to drive efficiencies, minimise costs and improve cash flow.

ALCHEMPro News Desk (DS)