The British manufacturing sector witnessed a continued contraction in December 2023, exacerbating concerns about the nation’s economic recovery.
The UK Final Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global/CIPS, recorded a figure of 46.2 in December. This marks a decline from November’s 47.2, which had briefly peaked at a seven-month high, and falls short of initial estimates pegged at 46.4.
A PMI reading below 50 signifies a contraction in manufacturing activity, and this marks the 17th successive month of contraction in the UK manufacturing PMI.
Contrary to the manufacturing downturn, the service sector experienced a notable upswing, with a preliminary PMI for December soaring to 52.7, marking its strongest expansion in six months.
Rob Dobson, the director of S&P Global Market Intelligence, highlighted a decline in new orders across both domestic and export markets, especially within the European Union. This slump led to a dip in confidence within the manufacturing sector, plunging to its lowest level in a year.
Dobson noted that manufacturers responded to these challenges by scaling back stock levels, curtailing purchases, and trimming employment, indicating a cautious approach toward cost management.
“The apprehensions surrounding high interest rates and the cost of living crisis have significantly dampened demand. Manufacturers foresee a bleak outlook in the coming months,” Dobson remarked. Despite the gloomy demand, the supply chain experienced some positive outcomes, with suppliers reducing raw material prices and achieving improved delivery times.
In a bid to counteract mounting costs, manufacturers marginally hiked prices for the second consecutive month, particularly within the capital goods sector. Additionally, the cost of production factors saw a dip, marking the lowest level since May.