UK manufacturing output contracts

Posted on 16 Jan 2020 and read 472 times
UK manufacturing output contracts The downturn in the UK manufacturing sector deepened at the end of 2019, with output contracting at the fastest pace since July 2012.

Production fell in response to declining intakes of new work from both domestic and overseas clients, while efforts to reduce Brexit safety stocks also ‘stymied’ output volumes.

The headline seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) — based on data collected between 5 and 18 December — fell to 47.5, the second-weakest level for almost seven-and-a-half years (it stood at 47.4 in August 2019).

The PMI has been below the neutral mark of 50.0 in each of the past eight months. Contractions were in both the intermediate and investment goods sectors, although there was a marginal expansion in the consumer goods category.

Business confidence remained positive in December, with over 43% of companies forecasting that their output would be higher one year later, compared to only 10% anticipating a contraction, although the degree of confidence ‘remained subdued’ by the historical standards of the survey (and below that registered in November).

Manufacturing employment was down for the ninth successive month in December, and input prices rose slightly for the first time in three months.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply (www.cips.org), said: “The pace of manufacturing’s decline in December will set alarm bells ringing, as production levels sank at their fastest rate since July 2012 — and with no sign of immediate recovery.

"As the downturn deepened, Brexit uncertainty continued to dominate the business landscape and impact on client confidence.

"In the closing stages of the year, the sector has ended on a dreary note; and although the result of the General Election will bring some clarity to businesses, it still feels like a long road ahead for manufacturing to recover its losses from 2019, and there will still be obstacles to overcome in 2020.”

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