UK manufacturing growth slumps to 16 month low
The soaring cost of living and a slowdown in shopper demand choked off growth in British manufacturing last month as the sector expanded at the weakest rate since January 2021, a closely watched survey revealed today
The S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) fell to 54.6 in May, down from 55.8 in April, as output from manufacturers slumped to its slowest pace of growth since October 2021.
Rob Dobson, Director at S&P Global Market Intelligence, said economic headwinds were battering factories in the UK.
“Factories are reporting a slowdown in domestic demand, falling exports, shortages of inputs and staff, rising cost pressures and heightened concern about the outlook given geopolitical uncertainties,” he said.
“The consumer goods sector was especially hard hit, as household demand slumped in response to the ongoing cost of living crisis.”
Dobson warned of further slowdowns to come this year as inflation surges and snarled supply chains continue to hamper the delivery of materials.
Costs paid by manufacturers and selling prices again also rose rapidly last month, which S&P said had been spurred by lockdowns in China , exchange rate factors, sanctions on Russia, the war in Ukraine and supply chain disruption.
Analysts at EY ITEM Club said the cost pressures showed no signs of abating
“May’s PMI survey signalled that cost and price pressures remain elevated. There was a rapid rise in input costs, if easing a little from April’s survey-record high, with a similar story for factory gate price inflation,” Martin Beck, chief economic advisor to the EY ITEM Club.
“With the poor results for the consumer sub-sector suggesting that the impact of the squeeze on household finances is beginning to make its mark, the outlook for the manufacturing sector is poor.”