Financial News: UK Manufacturing Contracts For First Time Since April

UK Manufacturing Contracts For First Time Since April

11/01/2024 - 07:33:00 (RTTNews)

(RTTNews) - The UK factory activity contracted for the first time since April as manufacturers adopted a wait-and-see approach on investment and spending ahead of the budget announcement, final data from S&P Global showed on Friday.

The final manufacturing Purchasing Managers' Index posted 49.9 in October, down from 51.5 in September.

The flash reading was 50.3. The index fell below the neutral 50.0 mark for the first time since April.

Although manufacturing output increased for the sixth straight month, the rate of growth was only marginal. Higher production was sustained through efforts to complete existing contracts and contributed to a mild building up of inventory holdings.

The fall in new work inflows reflected a lack of market confidence, economic slowdown and to some domestic clients applying a wait-and-see approach to committing to new contracts before the UK budget delivered in late-October.

Due to lower intakes from clients in Europe, China and the US, new export orders dropped for the thirty-third straight month.

Employment increased for the third time in the last four months in October. Companies linked job creation to higher production and efforts to clear backlogs of work. Further, business optimism recovered only slightly from a nine-month low seen in October.

On the price front, the survey showed that input cost inflation slowed sharply to its weakest in the current ten-month sequence of inflation. Selling prices increased for the twelfth consecutive month but the rate was the weakest since February. Average vendor lead times lengthened for the tenth consecutive month in October. Delivery times increased to the greatest extent since February.

"The November PMI will be especially keenly anticipated to see the near-term impact of the Budget on business conditions and in particular the effect on confidence," S&P Global Market Intelligence Director Rob Dobson said.

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