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The UK manufacturing sector performed better than first feared in August, but still saw conditions deteriorate sharply, according to survey data from S&P Global on Thursday.
The S&P Global/Chartered Institute of Procurement & Supply manufacturing purchasing managers' index fell to 47.3 points in August from 52.1 in July.
The reading, dropping dramatically to below the no-change mark of 50.0, indicates the sector tumbled into contraction territory last month. ‘This is the first sub-50.0 PMI reading since May 2020,’ said S&P Global.
However, the reading beat the even more pessimistic flash estimate of 46.0.
August's decline reflects weaker intakes of new work, reduced new export business and shortages of both staff and materials. Foreign demand tumbled at the fastest rate since May 2020, at the heights of the UK's first Covid lockdown.
Job growth ‘ground to a near standstill pace’.
Input cost growth slowed, allowing for an easing in selling price inflation. But the inflationary environment continued to weigh on sentiment, with confidence over the year ahead slumping to a 28-month low, compounded by recession and cost-of-living concerns.
Rob Dobson, director at S&P Global Market Intelligence, said energy prices remain a ‘key concern’ and ‘area of great uncertainty’ heading into the autumn.
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