U.K. manufacturing sector’s activity continues to fall in November
The downturn in U.K. manufacturing sector continued in November, as businesses responded to the delay to Brexit and a fresh injection of uncertainty from the forthcoming general election. The headline seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index dropped to 48.9 in the month from October’s 49.6. The PMI has stayed below the neutral mark of 50 for seven straight months. November saw a reduction in manufacturing output, with the pace of fall accelerating a bit over the month. Firms reported scaling back production in response to lower new order intakes. Attempts to reverse high stock holdings also added to the contraction, as did settling backlogs of work directly from inventories.
New orders dropped for the seventh straight month in November, reflecting tougher conditions in both domestic and overseas markets. Firms added this to destocking at clients following the delay to Brexit and the ongoing uncertainty surrounding the political, economic and global trade situations. The fall in new export orders was among the steepest registered over the last seven years. November saw employment in manufacturing drop for the eighth consecutive month, with the pace of job losses the steepest since September 2012. Firms attributed further cuts to cost reduction efforts, efficiencies, Brexit uncertainty, redundancies, natural wastage and staff restructuring.
Sector data indicated that the downturn at investment goods producers stayed severe, with production, new orders, new export business and employment all shrinking at steeper rates than the other sub-industries. Output, new business and staffing levels at intermediate goods producers also dropped. There were brighter signs form the consumer goods sector, which saw growth of both output and new orders.
The delay to Brexit had a marked impact on stock holdings and purchasing activity in November. Finished goods inventories dropped at the steepest rate in more than two-and-a-half years, while input buying volumes dropped to one of the greatest degrees since early 2013.