September saw the downturn in UK manufacturing output extend to three months, as companies cut back production in response to declining new order intakes, according to a survey.
The seasonally adjusted S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) was 48.4 in September, up from 47.3 in August but below the flash estimate of 48.5.
Although the rate of contraction in output eased slightly since August, it nonetheless remained substantial overall, the report said.
Contractions were registered across the consumer, intermediate and investment goods industries. The steepest decline was at intermediate goods producers, which was also the only sub-sector to see its rate of contraction accelerate.
There was less positive news on the price front as well, with rates of inflation for input costs and output charges both accelerating.
Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said today’s UK manufacturing PMI numbers confirmed the sector “is on the brink of a recession”.
Both the output and new orders indices remained well below the 50.0 mark, she said despite edging up to 44.2 in September, from 42.7 in August and to 44.8, from 43.9, respectively.
She said the sector already was struggling before the disruption to markets caused by the new chancellor’s mini-budget and feared “the downturn in manufacturing output looks set to extend deep into 2023”.
Martin Beck, chief economic advisor to the EY ITEM Club, focused on the pricing and cost pressures, pointing out that inflation is likely to remain high in the short-term adding to the pressure for the Bank of England to increase interest rates substantially at its next meeting in November.
“The EY ITEM Club thinks that it is likely that the Monetary Policy Committee will increase interest rates by up to 100bps at its next meeting in November,” he said.