UK manufacturers see output, new orders contract further: S&P Global

The seasonally-adjusted S&P Global- Chartered Institute of Procurement & Supply (CIPS) UK manufacturing purchasing managers’ index (PMI) posted 47.0 in January, up from December's 31-month low of 45.3 and above the flash estimate of 46.7.

The headline PMI remained at a sub-50.0 level, signalling deterioration, for the sixth successive month.

The total volume of new business received fell for the eighth month running, reflecting weaker demand from both domestic and overseas clients, the latter affected by lower intakes of new work from the United States, Europe, the Middle East and Africa (EMEA), and Asia (especially China).

Ongoing port and Brexit issues also had an impact. Manufacturers maintained a positive outlook for the sector despite the ongoing downturn, fears about sustained price inflation and the possibility of a UK economic recession, S&P Global said in a release.

Optimism rose to its highest level since April 2022, reflecting new projects and products, investment opportunities, proactive sales and marketing initiatives and hoped for revivals of domestic and overseas market conditions.

The ongoing manufacturing downturn affected decisions relating to hirings, purchasing and stock holdings in January. Employment fell for the fourth successive month. Some firms cut jobs in response to lower production and weaker market demand, whereas others experienced difficulties in replacing leavers due to shortages of labour and required skill sets.

Although global supply chains remained stretched at the start of 2023, UK manufacturers again indicated signs of these constraints lessening. Average vendor delivery times lengthened only mildly and to the least marked degree in three years.

Manufacturers still face difficulties relating to supplier capacity, port delays, Brexit, the war in Ukraine and input shortages, however.

Average input costs rose at the least marked rate for 27 months in January. However, there was a slight uptick in selling price inflation, mainly reflecting a marked acceleration at consumer goods producers.

Fibre2Fashion News Desk (DS)