British manufacturing activity contracted at a faster pace in December, with output falling sharply amid weaker demand conditions. The latest survey results from S&P Global revealed that the Chartered Institute of Procurement & Supply Manufacturing Purchasing Managers’ Index (PMI) dropped to 46.2 in December from a seven-month high of 47.2 in November. Any reading below 50 indicates contraction in the sector.
The decline in manufacturing production continued for the tenth consecutive month in December, as both consumer and intermediate goods sub-industries experienced downturns. This offset the expansion seen in the investment goods sector. New orders also fell for the ninth consecutive month, primarily due to a weak economic backdrop. Weak foreign demand, especially from the US, mainland China, mainland Europe, and Canada, further contributed to the overall decline.
Job losses were recorded for the fifteenth month in a row, attributed to redundancies, efficiency gains, hiring freezes, and cost control measures. On the price front, input costs fell further in December, driven by lower prices for chemicals, food stuffs, metals, paper, plastics, and timber. However, selling prices rose slightly for the second straight month.
Looking ahead, business optimism was dampened in December due to a slowing economy, client closures, and high interest rates. Manufacturers are facing challenging conditions both domestically and internationally, highlighting the impact of global economic uncertainties on the UK manufacturing sector.
The intensification of the UK manufacturing downturn in December reflects the ongoing struggles faced by the sector. With job losses and weak demand persisting, manufacturers are grappling with multiple challenges. The decline in foreign demand from key markets such as the US and China further exacerbates the situation. However, there is a slight silver lining as input costs continue to decrease, providing some relief to manufacturers.
Industry experts emphasize the need for measures to support the manufacturing sector in the face of ongoing difficulties. Increased investment, innovative strategies, and initiatives to boost domestic and international demand could help stimulate growth and reverse the downturn. With a slowing economy and uncertain global trade environment, it remains to be seen how the industry will navigate these challenges in the months to come.
The UK manufacturing downturn in December serves as a reminder of the importance of a robust and resilient manufacturing sector. Policymakers, industry leaders, and stakeholders must work together to address the underlying issues and create an environment conducive to growth and stability.
