Financial News: UK Manufacturing Downturn Deepens February

UK Manufacturing Downturn Deepens February

03/03/2025 - 08:31:00 (RTTNews)

(RTTNews) - UK manufacturing activity deteriorated at the steepest pace in fourteen months in February amid ongoing concerns about weak demand and rising cost pressures, final survey results from S&P Global showed on Monday.

The final manufacturing Purchasing Managers' Index dropped to 46.9 in February from 48.3 in January. The reading was above the flash score of 46.4.

A score below 50.0 suggests contraction. Operating conditions have deteriorated in each of the past five months.

Output fell for the fourth successive month in February due to lower new order intakes, subdued client confidence, and supply chain issues. Weaker demand was evident in both domestic and foreign clients.

A lackluster domestic demand was mainly caused by a combination of rising cost pressures, an associated lack of willingness to spend among customers, and the impact of policy changes announced in last year's Autumn Budget.

New export orders fell at the quickest pace in a year amid reduced new order intakes from Brazil, Europe, the Middle East, and the USA.

Among three monitored sub-sectors, consumer goods was the worst-performing sector overall, followed by intermediate and investment goods.

Firms reduced their workforce numbers at the fastest pace since May 2020, reflecting weak demand, cost control initiatives, and restructuring in response to changes in both the minimum wage and employer national insurance contributions.

There were also cutbacks in purchasing activity and stock holdings due to cost and demand considerations. Supply chain pressures persisted in February, linked to shipping delays, vendor capacity issues, port disruption, customs delays, and an increasing number of items being on back order.

On the price front, both input and output price inflation accelerated in February. Higher price pressures were driven by suppliers front-loading expected increases in their own material shortages and general price inflationary pressures.

Looking ahead, business confidence strengthened to a 6-month high, buoyed by investment spending, marketing initiatives, new products and projects, planned diversifications, and hopes for economic conditions.

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