UK manufacturing suffers setback as PMI falls to 3-month low in April

Manufacturing production fell for the second month in a row during April. That said, the rate of contraction remained mild and was slightly less marked than in the prior survey month. Output rose in the investment goods sector, but fell at consumer and intermediate goods producers. Companies reported that output was scaled back due to reduced intakes of new work from both domestic and overseas clients.

Total new order inflows decreased at the quickest pace in three months in April, after rising for the first time in almost a year during March. There was mention of increased client uncertainty, customer destocking and efforts to control costs all contributing to the drop in new work placed, as per the S&P Global / CIPS UK Manufacturing PMI report.

Softer demand from the US, China, and mainland Europe meanwhile led to a decrease in new business from overseas. New export orders contracted for the fifteenth consecutive month, with the rate of decline gathering momentum. Data broken down by sector provided a more varied picture, however. Consumer and intermediate goods producers saw further declines in new export work, whereas the investment goods sector saw growth hit a 20-month high.

April saw further job losses at UK manufacturers. Employment fell for the seventh month in a row, albeit at the weakest pace during that sequence. The reduction to headcounts was focussed on medium- and large-sized companies. In contrast, small-scale producers raised employment for the fourth successive month.

Although current conditions remained subdued, manufacturers maintained a positive outlook in April. Optimism rose to a 14-month high, with over 61 per cent of companies reporting that they expect output to rise during the coming year. Positive sentiment reflected investment spending, new product launches, forecasts of improved market conditions, and organic growth plans.

There was also positive news for manufacturers on the price and supply fronts. Rates of increase in average input costs and output charges both eased in April, falling to 35- and 28-month lows respectively. Companies linked slower cost increases to reduced supply chain pressure, improved material availability, declining shipping rates and weaker demand for inputs.

Vendor delivery times shortened for the third successive month in April, in a further sign of supply chain pressures easing following the severe disruptions experienced over much of the prior three years. There was mention of improved material availability, better stock levels at suppliers and signs of vendors working through backlogs and bottlenecks. Reduced demand for raw materials also contributed to the shortening of delivery times, the report added.

April saw input buying volumes at UK manufacturers decline for the tenth month running. Purchasing activity was cut back in response to lower production requirements and efforts to trim excess stock holdings. Inventories of both inputs and finished goods fell during the latest survey month.

ALCHEMPro News Desk (DP)