UK Manufacturing Shrinks Most In 7 Months

(RTTNews) - The British manufacturing downturn deepened in July as output, new orders and employment all fell at faster rates amid market weakness, both domestically and internationally, survey results from S&P Global revealed Tuesday.

The Chartered Institute of Procurement & Supply Manufacturing Purchasing Managers' Index, or PMI, dropped to a seven-month low of 45.3 in July from 46.5 in May. The flash estimate was 45.0.

Both output and new orders declined further in July, with all three broad product categories, covering consumer, intermediate, and investment goods, seeing falls in both variables, the survey said.

New export business fell for the eighteenth successive month in July and at the quickest rates over the past three years amid a general weakening of global market conditions.

The rate of decline in employment across the UK manufacturing sector was the steepest in seven months, with job cuts more evident at consumer and intermediate goods producers.

Outstanding business fell for the fifteenth month in a row and to one of the greatest extents during that sequence. However, there was an improvement in supplier performance for the sixth consecutive month.

On the price front, input prices fell for the third straight month, linked to increased competition between suppliers, weak input demand, and lower transportation and energy costs.

However, selling prices showed an increase as efforts to recover margins followed a period of marked cost inflation.

Despite the current tough operating environment, manufacturers anticipated better conditions in the future, with 53 percent of survey participants expecting output to rise over the coming year, with the degree of positive sentiment edging up from June's six-month low.

"Domestic and export demand are weakening, and backlogs of work are declining sharply, all of which likely presages further cutbacks to production, employment and purchasing in the months ahead," S&P Global Market Intelligence Director Rob Dobson said.

"The only upside is that prices are falling in this environment of sharply deteriorating demand, with cost pressures also helped lower by further repair to supply chains."

That said, lower prices are largely a symptom of malaise and hence bode ill for manufacturers' profits, which may in turn hit investment, Dobson added.