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Growth in the UK manufacturing sector weakened in July, figures on Monday showed, with pressure from a cost of living crisis and even a heatwave hitting new work.
The latest S&P Global/CIPS UK manufacturing purchasing managers' index fell to 52.1 points in July, from 52.8 in June. Though remaining above the 50.0 no change mark, the PMI hit its weakest level in over two years.
‘The UK manufacturing sector started the third quarter on a weak footing. Output contracted for the first time in over two years as intakes of new work and new export business both continued to decline. The labour market fared better, as job creation posted a surprise acceleration as companies acted to address staff shortages,’ S&P Global explained.
Weak demand, a cost-of-living crisis and hot weather were to blame for the fall in new orders, S&P Global added. Temperatures on July 19 peaked above 40 degrees Celsius, provisionally the hottest day on record in the UK.
‘Foreign demand fell for the sixth month in a row, amid reports of weaker inflows from mainland Europe (partly due to post-Brexit issues), the USA and China,’ S&P Global added.
More promisingly, there were more signs that inflationary pressures have peaked.
S&P Global explained: ‘Vendor lead times lengthened to the least marked extent in almost two years and average input prices increased at the weakest pace since January 2021.’
Looking ahead, optimism in July remained at the two-year lows seen in June.
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