Member Article

Manufacturing suffers second month of accelerated downturn

The manufacturing industry experienced further slowdown in the UK for the second month in a row, according to figures from the CPIS/Markit Purchasing Managers’ Index (PMI).

Production volumes fell last month and export figures suffered while the UK underwent even sharper declines.

Statistics showed that operating conditions experienced further deterioration, while the PMI fell from 48.1 in September to 47.5 in October.

CIPS/Markit said employment prospects had worsened for manufacturing workers as a result of unused capacity, and added that industry leader “remained cost-cautious”.

Downturns in business were attributed to lower levels of orders and a weakened demand for products at home.

Economic struggles in the Eurozone appear to have affected manufacturers, while demand from customers in Asian markets fell.

David Noble, Chief Executive of CIPS commented: “The UK’s manufacturing industry continues to suffer from a potent cocktail of declining export sales, depressed demand and rising cost pressures which have resulted in a hangover that the industry has been struggling to shake off all year.

“The one vestige of hope for the industry comes from the consumer goods sector which bucked the trend in the previous month with export orders and domestic demand up.”

Senior Economist at Markit, Rob Dobson, added: “All of this is placing manufacturers on a cautious footing, especially regarding costs, which will filter through to the wider economy in the form of manufacturing job losses, lower levels of input purchasing and disinvestment of inventories.

“There are some pockets of positivity nonetheless. The consumer goods sector bounced back robustly in October to really buck the wider trend.

“This chimes with ongoing signs that domestic retail sales volumes are holding up reasonably well.”

Chief Economist at EEF, Lee Hopley, commented: “While the figure points to a slow start to the fourth quarter, the activity indicator has been bouncing around below the 50 mark for a good portion of this year as the slowdown in Europe continues and, concerns around prospects in other parts of the world are starting to come to the fore.

“As ever, the picture isn’t universally negative as some industry sectors are bucking the weaker trend. Nevertheless, the potential drag from further weakening in Europe remains the big risk on the horizon and will continue to drive caution across the sector.”

This was posted in Bdaily's Members' News section by Miranda Dobson .