Manufacturers in negative territory
Britain’s manufacturing sector has remained in negative territory for the fourth consecutive month amid weak new business, supply chain disruption and shortages.
The closely-watched S&P Global/cips purchasing managers’index(pmi)forthesector scored 46.5 in November, edging up from a 46.2 reading for October. Experts had predicted it would remain at 46.2 for November. Any reading below 50 is considered to show that the sector is in contraction.
Despite the slight uptick last month, the report highlighted it was still one of the “lowest levels during the past 14 years”. Experts said declining sentiment in the face of inflation led to more job losses over the month, with the rate of job cutting at its steepest in two years.
Rob Dobson, director at S&P Global Market Intelligence, said: “November saw a further contractionoftheukmanufacturing sector as weak demand, declining export sales, high energy prices and component shortages all hit industry hard. The outlook for the sectoralsodarkened,asconfidence amongmanufacturersfelltoits lowest level since April 2020. Weak sentiment and declining intakes of new work led to job losses, a retrenchment in purchasing activity and an accumulation of finished goods inventory that will likely provide a further brake to output
during the months ahead.” Firmsreportedlowerstaffingin Novemberasaresultofadownturn in new order intakes. Total levelsofnewworkdeclinedfurtherasmanufacturersrevealed weakerdemandinbothdomestic and overseas markets. New export business contracted at the fastest pace for two-and-ahalf years as demand from the EU, China and US all “deteriorated”.
Mikethornton,nationalhead of manufacturing at RSM UK, the audit, tax and consulting
firm, said: “When looking in more detail at the data, business optimism is plummeting, as new orders and output declined further in November, as a result of supply chain disruption and continued global material shortages. The fallout of Brexit and more recently the mini-budget also appear tohaveweakenedrelationships withkeyglobalexportmarkets, especially in the EU, the US and China. With Chancellor Jeremy Hunt now setting out plans to relaunch the UK’S industrial
strategy, manufacturers will be eagerly awaiting to see what this means in terms of investment in skills and technology for growth, as well as re-establishing international markets over the coming year.”
Maddie Walker at Accenture UK noted: “With inflationary pressures, tight labour market conditionsandtheongoingcost of living crisis, manufacturers are understandably pessimistic about the future which has hurt output.”
John Glen, chief economist
at the Chartered Institute of Procurement & Supply (Cips), added: “Evaporating consumer confidence and fewer orders from previously strong markets such as the EU, US and China compounded the problem of a weakening marketplace. One vestige of hope is that with stock levels rising at the fastest rate for over three-and-ahalf years, supplier deliveries to end consumers should be much quicker.”