UK manufacturing downturn accelerates at end of 2022: S&P Global

The seasonally adjusted S&P Global-Chartered Institute of Procurement & Supply (CIPS) UK manufacturing purchasing managers’ index (PMI) fell to a 31-month low of 45.3 in December, down from 46.5 in November, but above the earlier flash estimate of 44.7.

The PMI has remained below the neutral 50 mark for five successive months.

Excluding the series lows registered during the first pandemic lockdown, the current PMI reading is one of the weakest since mid-2009, S&P Global said in a release.

All five of the PMI sub-indices signalled a weaker operating environment for the UK manufacturing economy. Output, new orders, employment and stocks of purchases all fell at accelerated rates, while vendor delivery times (an indicator of supply chain stress) lengthened to the least marked extent since January 2020.

Manufacturing production contracted for the sixth successive month in December. Moreover, the rate of decline was among the steepest during the past 14 years.

Companies reported that output had been scaled back due to declining intakes of new work and disruption caused by stretched supply chains and material shortages.

December saw a similarly steep decrease in the level of incoming new business. The decline in new work received reflected weaker domestic and overseas demand, economic uncertainty, client destocking and customers postponing orders.

On the export front, manufacturers reported lower demand from markets such as China, the United States, mainland Europe and Ireland. The main driver of lost export contracts was weak global economic conditions.

The downturn in manufacturing was also increasingly reflected in the labour market. Job cuts were seen for the third consecutive month, with the rate of loss the steepest since October 2020.

UK manufacturers passed on part of the increase in costs to their clients in the form of higher selling prices during December. However, in line with the easing in cost inflation, the rate of increase in output charges dipped to a near two-year low.

ALCHEMPro News Desk (DS)