Confidence among UK manufacturing business dropped almost as sharply in the past month as during the first Covid lockdown, as uncertainty gripped the sector ahead of the autumn Budget at the end of this month.
The UK industry remained in growth mode, however, with output rising for the fifth successive month in September, though the pace was slightly slower than the month before, according to the UK manufacturing purchasing managers' index (PMI) from S&P Global.
September's PMI came in at 51.5, down from the 52.5 mark the previous month, with growth of output and of new orders both easing slightly.
However, business confidence sank to a nine-month low as manufacturing companies adopted a 'wait-and-see approach' in their decision-making ahead of the big speech from new Chancellor of the Exchequer in four weeks' time.
"The UK manufacturing sector is still expanding at a solid, albeit slightly slower, pace. Output rose for the fifth successive month in September, underpinned by a resilient domestic market," said Rob Dobson, director at S&P Global.
"However, manufacturers have become more nervous about the outlook, suggesting that the current spell of impressive growth is fading".
He said the extent of the drop in confidence was "striking", beaten only by the apprehension seen in the March 2020 lockdowns.
"Uncertainty about the direction of government policy ahead of the coming autumn Budget was a clear cause of the loss of confidence, especially given recent gloomy messaging, though firms are also worried about wider global geopolitical issues and economic growth risks," said Dobson.
Price pressures also were a prominent feature in the survey, with input cost inflation accelerating to a 20-month high, leading manufacturers to further push up their selling prices.
"Freight cost rises are a big factor underlying the resurgence in the price measures, as supply chains continue to feel the strain of the Red Sea crisis and global conflicts," Dobson said.