2nd Dec 2024 09:49
(Alliance News) - The UK manufacturing sector endured a sharper decline than expected last month, a survey on Monday showed, amid the steepest fall in new business since February.
Survey respondents also pointed to a delay in some investment decisions, by both manufacturers and customers, after the UK budget.
The S&P Global UK manufacturing purchasing managers' index fell to a nine-month-low of 48.0 points in November from 49.9 in October. The final reading was below the flash estimate of 48.6 points.
The 50-point mark separates growth from decline, so the latest reading suggests the manufacturing economy is in downturn territory, after more-or-less treading water in October.
"Output fell for the first time in seven months following the sharpest retrenchment in new order intakes since February. Ongoing concerns surrounding the economic outlook, costs and weak demand meanwhile led to cutbacks in staffing, purchasing and inventory holdings," S&P Global said.
"Survey respondents linked the declines in output and new orders to delayed investment decisions, cutbacks to new projects due to domestic market uncertainty and rising geopolitical tensions. Some firms noted that announcements in the UK budget had led to budgets being re-appraised at manufacturers and their clients alike."
The UK government budget announced at the end of October included a number tax increases for companies.
Overseas orders declined for the 31st month on-the-spin. There was lower demand from the US, China, EU and Middle East. EU demand was hurt by weakness in the German automotive sector.
Looking ahead, 52% of the respondents expect manufacturing output to rise in the year ahead, the level of confidence unchanged since October. S&P Global said 11% are predicting a contraction, rising from 8% in October.
"Planned expansions and diversifications, product launches, hopes for economic recovery, and efforts to revive export demand were cited as reasons for optimism by UK manufacturers. That said, many remained concerned about rising geopolitical tensions, domestic politics and the impact of higher employment costs on future domestic demand," S&P Global said.
The survey features a panel of 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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