Manufacturing job cuts accelerate ahead of national insurance hike
Activity in the UK’s manufacturing sector dropped to its lowest level in fourteen months, a new survey has revealed, with lower demand and weak confidence plaguing the industry.
The S&P’s manufacturing purchasing managers’ index (PMI) showed downturns deepened as firms braced for changes made in the Government’s budget to be enacted.
The index stood at 46.9 falling from 47.0 in January, which at the time was the lowest level seen in 11 months.
Whilst it did manage to beat the ‘flash’ estimate of 46.4, the PMI highlighted the downturn had caused the steepest job losses since mid-2020.
All three sectors, consumer, intermediate and investment goods, saw reductions in production and new orders, with the consumer goods sector performing the worst.
Employers brace for national insurance hike
S&P said the latest round of job cuts reflected “weak demand, cost control initiatives and restructuring in response to changes in both the minimum wage and employer national insurance contributions”.
Companies responded to the deepening downturn with lay-offs, reduced hours and redundancies, as well as not replacing leavers and retirees.
The latest figures showed staffing levels falling in five out of the past six months.
Rob Dobson, S&P global market intelligence director, said: “Weak demand, low client confidence and rising cost pressures are accelerating the downturns in output and new orders, while the Autumn Budget’s changes to the national minimum wage and employer NICs are driving up inflation fears and intensifying the downward trend in staff headcounts.
“The pace of manufacturing job losses is currently running at a rate not seen since the pandemic months of mid-2020.”
The 1.2 per cent increase on employers’ national insurance to 15 per cent was a flagship policy introduced by Chancellor Rachel Reeves in her budget.
The figures will mark another hit to public confidence in the Chancellor after Reeves promised to “unleash growth” throughout the UK.
The industry was hit in both the domestic and foreign market, with the home front downbeat due to a combination of lack of expenditure and impacts of the Autumn budget.
New export business fell at its quickest pace in a year, with overseas market conditions said to be generally quiet.