UK manufacturing sector contracts at start of Q4 2023: S&P Global

03 Nov '23

2 min read

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Insights

The UK manufacturing sector contracted at the start of 2023 final quarter, as October saw output, new orders and employment fall, S&P Global said.
Production fell for the eighth consecutive month, the most sustained sequence of unbroken contraction since 2008-09.
Manufacturers maintained a positive outlook, but business optimism retreated to a ten-month low.

The UK manufacturing sector contracted at the beginning of final quarter this year, as October saw output, new orders and employment all decline, according to S&P Global.

Difficult and uncertain market conditions reportedly led to increased caution among both manufacturers and their clients alike.

The seasonally adjusted S&P Global-Chartered Institute of Procurement & Supply (CIPS) UK manufacturing purchasing managers’ index (PMI) posted 44.8 in October, up from 44.3 in September, but below the earlier flash estimate of 45.2.

All five of the sub-components included in the PMI calculation deteriorated in operating conditions during October.

Alongside lower new orders, output and employment, stocks of purchases also declined and suppliers' delivery times improved, S&P Global said in a release.

Production fell for the eighth successive month in October, the most sustained sequence of unbroken contraction since 2008-09. Moreover, the rate of decline remained solid and was slightly sharper than in the prior survey month.

The start of the final quarter saw UK manufacturers buffeted by tough market conditions both at home and overseas. The total level of new business received decreased for the seventh straight month in October, albeit to a slightly weaker extent than in September.

Meanwhile, weaker inflows of new work from Europe, mainland China and Brazil were the main factors underlying a twenty-first successive month-on-month decline in new export business.

October saw manufacturing job losses for the thirteenth consecutive month. Although the rate of contraction eased slightly, it remained sharper than the average for the current sequence of decline. Signs of spare capacity at manufacturers contributed to the latest round of job cuts and also to a further reduction in backlogs of work.

Although manufacturers maintained a positive outlook, business optimism retreated to a ten-month low in October. While 54 per cent of respondents expect output to rise over the coming year, 36 per cent forecast broad stagnation with the remainder anticipating contractions.

October also witnessed price pressures decline, as input costs and output charges both decreased during the month.

ALCHEMPro News Desk (DS)

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