The UK manufacturing sector experienced a solid rise in production volumes at the end of September, marking the close of the third quarter of the year, according to a report from S&P Global. Both output and new orders continued to increase, primarily driven by growth in the domestic market. However, a cautious approach was observed among manufacturers, influenced by the upcoming Autumn Statement, which contributed to slower gains in production and new business. This cautious sentiment also led to a decrease in future expectations, which reached a nine-month low.
The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) recorded a value of 51.5 in September, down from August’s 26-month high of 52.5, but in line with the earlier flash estimate. The PMI has remained above the neutral 50 mark for five consecutive months, indicating expansion in the sector. Three out of the five PMI sub-components—output, new orders, and suppliers’ delivery times—indicated improved manufacturing operating conditions. However, levels of employment and stockpiles of purchases declined as manufacturers sought to manage rising input costs by reducing expenditures in other areas.
Manufacturing production increased for the fifth consecutive month in September, driven by improved new work intakes. Nevertheless, there was a continued decline in incoming new export business for the thirty-second month in a row, primarily attributed to subdued market conditions in Europe, particularly concerns surrounding demand from France and Germany. Lower demand from U.S. clients was also noted. In September, manufacturers and their clients expressed rising uncertainty, which affected various aspects of production. The increases in new orders and output were slower compared to August, and confidence in future production trends declined sharply. Additionally, cuts to employment, purchasing activity, and stock levels indicated heightened cost-consciousness.
Business optimism reached a nine-month low in September, with the month-on-month decline in the future output index being the second steepest on record, surpassed only by a decline in March 2020. Concerns regarding potential changes in government policy related to the upcoming Autumn budget and ongoing global market conditions contributed to this cautious outlook.
On a positive note, half of the surveyed manufacturers (down from over 60 percent in August) still anticipate increased output in the coming year, citing new projects, marketing initiatives, and planned product launches as factors for optimism. In terms of employment, the manufacturing sector saw a decline in September after two consecutive months of increases. Additionally, average input prices rose at their fastest pace since January 2023.
The latest in supply chain logistics news is now on The Supply Chain Report. Visit ADAMftd.com for free tools related to international trade.
#UKManufacturing #PMI #EconomicGrowth #ManufacturingTrends #SustainableDevelopment
