(Sharecast News) – The downturn in the UK manufacturing sector intensified last month, according to a survey out on Tuesday.
The S&P Global/CIPS manufacturing purchasing managers’ index fell to 45.3 in July from 46.5 in June, remaining below the 50.0 mark that separates contraction from expansion.
This marked the lowest reading so far this year and joint-weakest since May 2020. Still, it was a touch higher than consensus and the flash estimate of 45.0.
Dr. John Glen, chief economist at the Chartered Institute of Procurement & Supply, said: “The outlook for the manufacturing sector darkened again in July with a sudden fall in output and one of the worst since the pandemic. Manufacturers have registered a reduction in activity in all-bar one month during the past year as new work and employment levels shrank back.
“The lowest orders since last November from overseas customers was particularly surprising, just when signs of improvements in global marketplace activity had started to appear, new work from the Eurozone was subdued just as domestic work dried up.
“Although costs for some materials were still being driven higher by inflationary rises, taking a huge bite out of business cashflow, the cost of many more inputs showed sharp drops on the back of weak demand and more availability as delivery times improved for the sixth consecutive month. This opportunity for price reductions for end consumers may take a few months to filter through as firms ensure a more stable footing for their operations for the second half of 2023.
“Overall, it seems that recovery has stalled. Concerns about further interest rate rises making borrowing more expensive and customers reluctant to buy had the sector running on empty for another month but more than half of survey respondents kept their chins up and remained hopeful about the next 12 months.”