UK Manufacturing Shrinks Most Since May 2020

(RTTNews) - The British manufacturing downturn deepened in August and was the steepest in more than three years as output and new orders fell at faster rates amid the weak market conditions both domestically and internationally, survey results from S&P Global revealed Friday.

The Chartered Institute of Procurement & Supply Manufacturing Purchasing Managers' Index, or PMI, dropped to a 39-month low of 43.0 in August from 45.3 in July. The flash estimate was 42.5.

A PMI reading below 50 suggests contraction in the sector.

Output declined for the sixth straight month in August, at the steepest pace in a year. The latest contraction was attributed to slower market conditions, declining new order intakes, and efforts to reduce inventories of finished goods.

New order intakes declined significantly in August as both domestic and overseas market conditions deteriorated.

The survey panelists reported that a generally weaker global economic backdrop had led to declining order intakes from key markets such as the US, Europe, China, and South America.

Rates of contraction in output and new orders were among the steepest recorded outside of events such as the global financial crisis or the COVID-19 pandemic, the PMI survey said.

Companies reduced their workforce strength for the eleventh successive month, linked to weaker new work intakes, falling output volumes, and cost control efforts. In addition, excess capacity is also a constraint for new employment creation.

Input buying volumes fell for the fourteenth month running and at the sharpest rate in almost three-and-a-half years.

On the price front, input prices fell for the fourth straight month, linked to lower costs for energy, fuels, oil by-products, metals, polymers, and rubber due to weaker demand. Selling prices, however, decreased only marginally.

Manufacturers remained optimistic about their production outlook amid hopes for a market revival, new product launches, and acquisition or diversification plans.