UK ‘turning a corner’ as manufacturing decline slows
The UK’s manufacturing sector appears to have taken a potential turn as November witnessed a slight improvement, beating forecasts, and a slowing rate of decline.
S&P Global’s Purchasing Managers’ Index (PMI) for the UK economy landed at 47.2, up from October’s 44.8.
The PMI assesses the health of an economy’s services and manufacturing sector. Economists had expected a reading of 46.6.
This marks the third consecutive monthly rise, reaching its highest level since April. However, the PMI has persistently remained below the neutral 50.0 mark for the past 16 months.
While production continued to contract for the ninth consecutive month, the pace of decline “eased sharply to its second-weakest during that sequence”.
Production slowed due to weakened domestic demand, reduced new export business, and destocking by both manufacturers and their clients. New orders also experienced a slowdown.
Rob Dobson, Director at S&P Global Market Intelligence, said: “The latest scaling back of production was mainly driven by weak business to business and capital spending, as output and new orders contracted in both the intermediate and investment goods sectors.
“In contrast, activity posted a solid uptick at consumer-facing manufacturers.”
Business confidence showed a marginal increase in November. Around 53 per cent of companies expect production to increase in the coming year, compared to only 10 per cent anticipating contraction.
But concerns persist, especially as conditions are staying “softer than hoped” towards the end of the year, according to John Glen, chief economist at the Chartered Institute of Procurement and Supply.
He said: “A huge injection of uncertainty amongst customers meant new work fell for the eighth month in a row, as the UK economy continued along a fragile path unable to sustain solid marketplace activity. Orders from overseas were in an even more dire state and fell for the 22nd month.
“Other areas of concern include reduced spending on stock and also operational capacity as rising job losses signalled more difficult times ahead,” Glen added.
Job losses were registered for the fourteenth month in a row, mainly at medium and large-scale producers.