UK Manufacturing Downturn Continues

The UK factory downturn continued in September on weak output, new orders and employment, final survey results from S&P Global showed on Monday.

The Chartered Institute of Procurement & Supply factory Purchasing Managers’ Index posted 44.3 in September, up from a 39-month low of 43.0. The reading was above 44.2 estimated initially.

Although the reading improved from August, this was among the weakest seen over the last 14 years. All five sub-indices of PMI signaled weakening of underlying sector performance.

Companies reduced production in response to lower order intakes. Production declined for the seventh consecutive month. Reflecting lower demand from Europe, the US, mainland China and Brazil, new export business contracted again in September.

The ongoing downturns in output and new orders forced companies to cut back employment. The rate of decline was the second-steepest in the current twelve consecutive months of contraction.

The survey showed that backlogs of work decreased for the seventeenth straight month and at the fastest pace since April 2020. At the same time, the decline in purchasing activity was close to August’s 39-month high.

Further, average supplier delivery times improved again as supply chains continued to repair following the stresses of recent years.

On the price front, the survey showed that input cost decreased due to weaker demand in September. In contrast, selling prices increased for the first time in four months.

“Uncertainty in the market and low demand resulted in a difficult end to the quarter for the manufacturing sector, with today’s results putting paid to any hope that falling inflation was a sign of better things to come,” CIPS Chief Economist John Glen said.

“As the Conservative Party gathers in Manchester this week, the manufacturing sector will be looking for policies that can restore business and consumer confidence and help drive back demand,” added Glen.

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