UK manufacturing activity continued to slide in September amid Brexit concerns, a survey shows, fuelling fears that the sector may be sliding into recession, with companies cutting staffing at the fastest pace since February 2013.
The Chartered Institute of Procurement & Supply’s purchasing managers’ index for manufacturing, a composite measure of changes in output, new orders, employment, suppliers’ delivery times and stocks of goods purchased, edged up from a six-and-a-half-year low of 47.4 in August to 48.3 last month on a seasonally adjusted basis. However, it remained stuck well below the level of 50 deemed to separate expansion from contraction.
The index has now been below the 50 no-change mark for five consecutive months, its longest run in contractionary territory since mid-2009.
Manufacturing production continued to fall as companies responded to a further fall in new order intake. UK and export orders declined. The survey signals a continuing impact on British manufacturers from customers’ decisions to re-route supply chains away from the UK.
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The investment goods sub-sector was by far the weakest performer, CIPS observed, recording the steepest drops in output and new business.
CIPS added: “This reflected, at least in part, a reluctance among clients to commit to capital expenditure due to ongoing market uncertainties: economic, political and Brexit-related.”
Rob Dobson, director at CIPS survey compiler IHS Markit, said: “The UK manufacturing downturn continued in September, adding to signs that the sector may be sliding into recession. Output, new orders and employment all fell further as rising political, trade and economic uncertainties exacerbated concerns about Brexit.
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“Some manufacturers noted increased inventory-building activity in preparation for the forthcoming exit date, but the impact of such Brexit-related stockbuilding was dwarfed by weakening demand [from] other customers, due in part to clients routing supply chains away from the UK.”
He added: “The rate of job losses accelerated to a six-and-a-half-year high, highlighting how manufacturers are increasingly seeking to cut costs.”
CIPS director Duncan Brock said: “European clients became more resigned and made concrete plans to move away from UK suppliers and business closer to home seemed more reliable.”
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