Manufacturing activity in the UK declined last month, the latest purchasing managers’ index (PMI) shows.
The UK Manufacturing PMI, released today by the Chartered Institute of Purchasing & Supply (CIPS) and financial information services firm Markit, reveals that manufacturing production shrank to 48.4 in September, from 49.6 in August, slipping further below the dividing line of 50.0 which separates growth from contraction.
September was the third successive month of the latest downturn in UK manufacturing output, as export orders fell and cost pressures increased following recent rises in oil, food and commodity prices.
Although new export orders declined, the overall level of new orders went up for the second successive month. But Markit/CIPS said that the rate of growth was only marginal and mainly reflects a further weak increase from the severe contractions seen in the middle of the year.
While the rising cost of chemicals, energy, foodstuffs, metals, oil and plastics put pressure on manufacturers, inflation in the prices charged by manufacturers for their products remained subdued because weak demand and strong competition restricted their pricing power.
On a more positive note, the PMI report found a strengthening in demand for consumer goods. UK consumers appear to be doing their bit for the recovery, CIPS chief executive David Noble commented.
Economist Andrew Johnson from EEF, the manufacturers’ organisation, said that the lower PMI reading for September indicates that the ongoing strength in orders from emerging markets and the US is not counteracting the weakness in European markets.
However, the demand for consumer goods may indicate that, as UK inflation continues to ease, we could see stronger domestic demand in the final quarter of the year, Johnson added.
