UK manufacturing activity shrinks at fastest pace in five months

(Sharecast News) - Activity in the UK manufacturing sector contracted at the fastest pace in five months September, according to a survey released on Wednesday. The S&P Global manufacturing purchasing managers' index dropped to 46.2 from 47.0 in August, remaining below the 50.0 mark that separates contraction from expansion for the twelfth month in a row.

S&P noted that four of the five PMI components - output, new orders, employment and stocks of purchases - were consistent with a deterioration in operating conditions.

Manufacturing production declined for the eleventh month in a row, at the fastest pace since March, with the consumer, intermediate and investment goods sectors all seeing output fall at solid rates.

Manufacturers said production had been scaled back due to weaker intakes of new business, with demand from both domestic and export markets weak.

The survey also found that new order intakes subsequently fell for the twelfth month in a row, and to one of the greatest extents in the past two years.

This was put down to subdued client confidence, US tariff uncertainty and the consequences of a high cost backdrop, in particular for energy and staff. There were also reports that automotive supply chains were disrupted due to production shutdowns at Jaguar Land Rover.

Rob Dobson, director at S&P Global Market Intelligence, said: "The final manufacturing PMI results provide further worrying news for the health of UK industry. Manufacturers are facing an increasingly challenging environment, with intakes of new business and levels of production hit by weak market sentiment, a dearth of new export work and a high-cost environment exacerbated by tax and labour cost rises. Companies entwined into the autos supply chain are also facing a temporary hit to activity following the cyber-attack on JLR.

"The current tough operating environment is also seeping through to business confidence and leading to an increased focus on cost cutting. Confidence about the next 12 months remains at a relatively subdued level, job losses have been recorded in each of the past 11 months, and a further cut in purchasing activity is symptomatic of a focus on trimming non-essential spending."