UK Manufacturing Sector Shrinks In September

The UK manufacturing sector shrank again in September as companies cutback production amid falling orders, final survey data from S&P Global showed on Monday.

The S&P Global/Chartered Institute of Procurement & Supply manufacturing Purchasing Managers’ Index posted 48.4 in September, up from 47.3 in August.

However, a reading below 50.0 indicates contraction. Moreover, the score remained below the flash estimate of 48.5.

The decline in output eased slightly in August. However, the contraction remained substantial overall.

Manufacturers linked lower production to a reduction in new work intakes. Companies reported that expected orders were either canceled or postponed due to factors such as rising uncertainty, inflationary pressure and the cost-of-living crisis.

Nonetheless, manufacturers maintained a positive outlook overall during September. Employment increased in September as companies reported success in filling existing vacancies.

Input costs and output charges strengthened in September. Higher input costs were generally attributed to raw material shortages, sustained global commodity price inflation, cost pressures at suppliers, rising energy and transportation costs and exchange rate factors.

Output charge increases were mainly the result of the pass through of high costs to clients.

Rob Dobson, director at S&P Global Market Intelligence said, “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.”

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