Output, new orders and industry employment fell last month, according to a closely watched survey.
by Daniel Baines, business reporter
Tuesday 2 January 2024 at 12:04, United Kingdom
The recession in the UK manufacturing industry continued last month with output, new orders and employment falling, according to a closely watched survey.
Business optimism in the sector also fell to a 12-month low in December, amid customer closures and a surge interest ratesfound S&P Global/CIPS UK.
Companies reported that the manufacturing Purchasing Managers’ Index (PMI) weakened to 46.2 in December – the 17th straight month it was below a score of 50, the threshold for growth.
The figure also represents a decline due to a slight improvement in November, when the index reached a seven-month high of 47.2.
However, companies still expect production to rise, on average, in 2024, due to “increasing sales and new product launches,” the survey of about 650 manufacturers found.
“UK manufacturing output contracted at an increasing rate at the end of 2023,” said Rob Dobson, director of S&P Global.
“The demand backdrop also remains tepid, with new orders falling further as challenging conditions persist in both the domestic market and key export markets, particularly the EU.
“The downturn has hurt manufacturers’ confidence, which fell to its lowest level in a year, and encouraged renewed caution on cost with further reductions in inventory, purchasing and hiring levels.”
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He added: “With concerns about rising interest rates and Cost of living crisis With demand hurt, the outlook for manufacturers in the coming months remains decidedly bleak.
“But the decline in demand is having some positive effects on supply chains, with suppliers reducing their prices
For raw materials and lead times for vendors are showing further improvement.”
The survey also found a decline in demand from trading partners such as the United States, China, Europe and Canada.
Job losses were recorded for the 15th consecutive month, partly due to layoffs and a hiring freeze in the sector.