Financial News: UK Manufacturing Activity Contracts Most In 9 Months

UK Manufacturing Activity Contracts Most In 9 Months

12/02/2024 - 05:14:00 (RTTNews)

(RTTNews) - The UK manufacturing sector deteriorated at the steepest pace in nine months in November, as output and new orders declined amid concerns surrounding the economic outlook, high costs, and weak demand, final survey data released by S&P Global revealed on Monday.

The manufacturing purchasing managers' index dropped to 48.0 in November from 49.9 in October. Any reading below 50 indicates contraction. The flash reading was also 48.6.

Among components, output, new orders, employment, and stocks of purchased goods all deteriorated in November.

Weaker demand conditions from both domestic and foreign clients forced firms to scale back their production levels.

Incoming orders for new business fell at the fastest pace in nine months, which was more evident in the intermediate goods industry. Export demand was also not favorable as orders from overseas contracted for the thirty-first month in a row.

The survey revealed that declines in output and new orders were due to delayed investment decisions, cutbacks to new projects due to domestic market uncertainty, and rising geopolitical tensions.

Employment also decreased in November, and the rate of job shedding was the quickest since February. This was mainly linked to concerns over rising cost pressures and weak demand.

Supply chain pressures intensified in November, largely reflected in externalities such as the Red Sea crisis and border regulatory issues.

On the price front, input price inflation rose slightly in November, driven by higher costs for chemicals, energy, food products, metals, paper, and timber. Apart from that, higher freight costs, raw material shortages, and the Red Sea crisis also contributed to rising price pressures. On the other hand, output price selling price inflation eased to a nine-month low.

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