Downturn in UK manufacturing output extends till Sept: S&P, CIPS

There was less positive news on the price front as well, with rates of inflation for input costs and output charges both accelerating.

Although the rate of contraction in output eased slightly since August, it nonetheless remained substantial overall. Contractions were registered across the consumer, intermediate, and investment goods industries. The steepest decline was at intermediate goods producers, which was also the only sub-sector to see its rate of contraction accelerate. Manufacturers linked lower production to a reduction in new work intakes, according to a press release by S&P Global.

The level of new business declined for the fourth month running, albeit to a slightly weaker extent than in August. Companies faced tougher conditions in both domestic and export markets. There were also reports of expected orders being postponed, or cancelled, due to factors such as rising uncertainty, inflationary pressure, and the cost-of-living crisis.

September saw new export business contract at the quickest pace since May 2020, with reports of lower demand from the US, the European Union (EU), and China. Manufacturers faced weak global market conditions, rising uncertainty, high transportation costs reducing competitiveness, and longer lead times leading to cancelled orders.

Manufacturers maintained a positive outlook overall during September. Over 49 per cent forecast that their output would be higher one year from now, as planned investments, new product launches, and hopes for a calmer economic backdrop are expected to lead to an influx of new contracts. However, the degree of positive sentiment remained subdued overall, amid concerns about market uncertainty, high inflation, the cost-of-living crisis, and the increasing risk of economic recession in both the domestic and global economies.

Stocks of both purchases and finished goods rose, mainly due to the recent slump in output and new order volumes.

“With existing headwinds from the cost-of-living crisis likely to be exacerbated by the current volatility in financial markets, growing economic uncertainty, and further increases in borrowing rates, the industrial sector is likely to remain in the doldrums during the coming quarter to add to deepening recession risks,” said Rob Dobson, director at S&P Global Market Intelligence.

“Supply chain managers were buying less as customers either failed to place orders or cancelled work in hand. This slowdown was across the board as both domestic and export orders fell, impacted by concerns over transportation difficulties, disruptions in Felixstowe, and longer lead times. A shortage of components particularly made the completion of finished goods more difficult,” said Dr. John Glen, chief economist at the Chartered Institute of Procurement & Supply.

Fibre2Fashion News Desk (NB)