1st Nov 2024 10:05
(Alliance News) - The UK manufacturing economy made a soft start to the final quarter, falling into contraction territory for the first time since April, numbers on Friday showed.
The seasonally adjusted S&P Global UK manufacturing purchasing managers' index dropped to 49.9 points in October from 51.5 in September, also falling short of the flash tally of 50.3. A touch below the 50-point mark that separates growth from decline, Friday's reading suggests the manufacturing sector is in contraction.
It is the first time the manufacturing PMI has landed below 50 points since April, S&P Global said.
"The UK manufacturing economy continued to face rising headwinds at the start of the final quarter of 2024. A lack of market optimism, slower economic growth, stretched supply chains and concerns about the impacts of possible announcements in the UK budget (which were unknown at the time of the survey) led to reduced intakes of new work and a near-stalling of output growth," S&P Global commented.
"The new orders and stocks of purchases components (both of which signalled solid contractions) weighed heaviest on the PMI, while a noticeable easing in the rate of expansion of production also contributed to the decline in its level."
A decline in new work was a reflection of a scarcity in confidence, and a "wait-and-see approach" ahead of the budget, which was announced on Wednesday. Pre-budget caution was also evident in hiring.
"UK manufacturing employment increased for the third time in the past four months in October. Companies linked job creation to higher production and efforts to clear backlogs of work. However, the rate of increase was only modest, as many firms remained cautious about incurring additional costs, given uncertainty about the impact of possible changes announced in the UK budget. It also reflected relatively muted confidence about the future among manufacturers," S&P Global added.
Confidence for the year ahead recovered "only slightly" from September's nine-month ow.
"That said, the majority of firms still expect to see production rise over the coming year, compared to only 8% forecasting contraction. Where positive sentiment was indicated, this was attributed to new product development and hopes for a market revival," S&P Global said.
The PMI survey features a panel of around 650 manufacturers in the UK. Responses were collected in the second half of the month.
By Eric Cunha, Alliance News news editor
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