UK Manufacturing Moves Deep Into Contraction

(RTTNews) - The UK manufacturing sector contracted further in December with an accelerated downturn in output as tough domestic and global market conditions damped demand and expectations dipped to a one-year low, survey results from S&P Global revealed Tuesday.

The Chartered Institute of Procurement & Supply final Manufacturing Purchasing Managers' Index, or PMI, dropped to 46.2 in December from a seven-month high of 47.2 in November.

The flash score was 46.4. Any reading below 50 indicates contraction in the sector.

Manufacturing production declined for the tenth successive month in December, as consumer and intermediate goods sub-industries suffered downturns, more than offsetting expansion in investment goods.

In response to weaker new orders, reduced demand from foreign markets and efforts to trim stocks, manufacturers reduced their production.

New orders fell for the ninth straight month, linked to a weak economic backdrop. Foreign demand was also weak, especially in the US, mainland China, mainland Europe, and Canada.

Further, there was a sharp fall in backlogs of work.

In December, job losses were recorded for the fifteenth consecutive month due to redundancies, efficiency gains, hiring freezes, and cost control.

Input buying was reduced for the eighteenth straight month. Inventories of both inputs and finished products were depleted.

Average vendor performance improved as lower demand for inputs led to shorter lead times.

On the price front, input costs fell further amid lower costs for chemicals, food stuffs, metals, paper, plastics, and timber. Meanwhile, selling prices rose slightly for the second straight month.

Looking ahead, business optimism slid to a one-year low amid faltering economy, client closures and high interest rates. That said, companies expect production to increase over the coming twelve months.