Business optimism dipped to a two-and-a-half year low, as weak demand, recession fears, inflationary pressures and rising uncertainty hit confidence.
The seasonally adjusted S&P Global-Chartered Institute of Procurement & Supply (CIPS) UK manufacturing purchasing managers’ index (PMI) fell to a 29-month low of 46.2 in October, down from 48.4 in September but above the earlier flash estimate of 45.8.
The PMI has remained below the neutral 50 mark for three consecutive months.
The latest contraction was blamed on the weaker domestic market, already high stock levels at clients, subdued client confidence and inflationary pressures, S&P Global said in a note.
The impact of lower demand was felt across industry. Although the rate of contraction in production volumes eased to a three-month low in October, the consumer, intermediate and investment goods sectors all saw output decline.
The shortfall in new order intakes led to a solid increase in stocks of finished goods. Inventories rose for the sixth consecutive month, albeit at the slowest pace since June. The deterioration in new order inflows also hurt employment, purchasing activity and manufacturers' business optimism in October.
Forty-three per cent of the survey panel still forecast that production levels would be higher one year from now, supported by new product launches and possible decreases in both economic and political volatility.
October also saw purchasing activity cut back sharply in response to the manufacturing downturn. Input buying volumes fell for the fourth month running and to the greatest extent in almost two-and-a-half years.
ALCHEMPro News Desk (DS)
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