Manufacturing sector shrinks for fourth consecutive month as job cuts rise
1 December 2022, 10:28
Firms blamed weak new business, supply chain disruption and shortages.
The UK’s manufacturing sector shrank for the fourth consecutive month amid weak new business, supply chain disruption and shortages but improved marginally on the previous month.
The S&P Global/CIPS UK Manufacturing PMI scored 46.5 in November, edging up from a 46.2 reading in October.
Experts had predicted it would stay at 46.2 for November.
Anything below 50 is considered to show that the sector is shrinking.
Despite the improvement, the report highlighted it was still one of the “lowest levels during the past 14 years”.
Experts said declining sentiment in the face of inflation led to more job losses over the month, with the rate of job cutting at its steepest in two years.
Rob Dobson, director at S&P Global Market Intelligence, said: “November saw a further contraction of the UK manufacturing sector as weak demand, declining export sales, high energy prices and component shortages all hit industry hard.
🇬🇧 UK manufacturers saw further contractions in output, new orders and employment in November, while business sentiment towards future activity slipped to its lowest since April 2020. On the plus side, the #PMI edged up to 46.5 from 46.2 in Oct. Read more: https://t.co/n6M7Qcb8EK pic.twitter.com/XWdtTReNpL
— S&P Global PMI™ (@SPGlobalPMI) December 1, 2022
“The outlook for the sector also darkened, as confidence among manufacturers fell to its lowest level since April 2020.
“Weak sentiment and declining intakes of new work led to job losses, a retrenchment in purchasing activity and an accumulation of finished goods inventory that will likely provide a further brake to output during the months ahead.”
Companies reported lower staffing in November as a result of a downturn in new order intakes.
Total levels of new work declined further as manufacturers revealed weaker demand in both domestic and overseas markets.
New export business contracted at the fastest pace for two-and-a-half years as demand from the EU, China and US all “deteriorated”.
John Glen, chief economist at the Chartered Institute of Procurement & Supply, said: “Evaporating consumer confidence and fewer orders from previously strong markets such as the EU, US and China compounded the problem of a weakening marketplace.
“A depressing result for the country’s makers as optimism fell to its lowest since April 2020.
“One vestige of hope is that with stock levels rising at the fastest rate for over three-and-a-half years, supplier deliveries to end consumers and other manufacturers should be much quicker once the economy starts to improve as pressure on delivery times was the least marked since January 2020.”
