According to the most recent economic data, Britain’s industrial slump widened last month as output, order volume, and employment all declined faster.
The S&P Global/CIPS UK manufacturing purchasing managers index (PMI) cited “lacklustre” global demand for UK-made goods as well as a change in domestic consumer expenditure from goods to services as contributing factors.
According to the report, the decline in activity in May represented a four-month low, and the sector had been in negative territory for ten straight months.
Despite supply chain challenges for several firms starting to alleviate, new export orders have also decreased for 16 consecutive months.
With average input prices declining for the first time in three and a half years, the PMI data did, however, show a relief in expenses for hard-hit firms.
Director of S&P Global Market Intelligence Rob Dobson claimed a decline in demand from abroad had come “amid reports of lost orders from the US and mainland Europe”.
According to him, this was “exacerbated by some EU clients switching to more local sourcing to avoid post-Brexit trade complications”.
But Mr Dobson added: “Although near-term conditions remain challenging overall, manufacturers are still finding reasons for optimism, including brighter news on the price and supply fronts.
“Average input costs fell for the first time in three-and-a-half years, allowing some firms to maintain efforts to repair and protect margins damaged by a long and often severe period of cost inflation.
“The recent healing in global supply chains is also continuing apace, with lead times shortening to a near record extent in May.”
Customers ‘tired of Brexit checks.’
The Chartered Institute of Procurement & Supply’s chief economist, Dr John Glen, stated that “maker misery” for businesses persisted and that many people were still concerned about the UK’s economic outlook.
He noted that the decline in export orders also “demonstrated that customers from overseas [had become] tired of additional administrative Brexit checks.
“The fear around near-shoring goods became a reality, and the fall in overseas interest was the fastest since January.”
Dr Glen Stated, “More interest rate rises, increasing business costs, and the pressure from stubborn inflation will continue to keep business owners awake at night.
He said, “The threat of recession narrowly missed at the end of last year hasn’t passed entirely, so businesses will be tightening their belts for lean times to come, which could include more job shedding and reduced operations.”
The survey’s reading for May dropped from 47.8 in April to 47.1.
Any score below 50 suggests a declining sector.
James Brougham, a senior economist at Make UK, commented on the data as follows: “With powerful domestic manufacturing policies in place in the US and the EU, manufacturers can see that the likelihood of much export expansion to the UK’s biggest manufactured goods trading partners is dwindling.
“UK firms are eagerly awaiting both the UK’s response to these global economy-shifting policies, but perhaps more importantly, a unified vision from government for the sector over the next decade, with the long-term policies to boot.”
