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The downturn in the UK’s manufacturing sector continued in April, according to survey data on Tuesday, but companies remain optimistic towards the future.
The UK S&P Global/CIPS manufacturing purchasing managers’ index slipped to a three-month low of 47.8 points in April from 47.9 in March. Falling further below the 50-point mark that separates growth from contraction, it shows the deterioration has worsened slightly.
However, the final reading was better than the flash estimate of 46.6 points.
‘Output and new orders contracted, as manufacturers felt the impacts of client uncertainty, destocking and tightening cost controls. There was no escape from the subdued mood of the market, with both domestic and export customers remaining reticent to commit to new contracts,’ said Rob Dobson, director at S&P Global Market Intelligence.
New business from overseas fell amid softer demand from the US, China and mainland Europe, while export orders contracted for the fifteenth month in a row.
‘There was better news on supply chains, as supplier lead times have now shortened in each of the past three months, providing welcome news in terms of improved resource availability and helping drive down raw material price pressures,’ Dobson added.
Despite the ongoing deterioration in the sector, manufacturers were feeling positive towards the future, with optimism reaching a 14-month high. Over 61% of the companies surveyed expected output to rise over the next year.
This reflected investment spending, new product launches, better forecasts for market conditions and organic growth plans, S&P noted.
‘Demand will need to pick up in the months ahead to warrant any increase in production, and with the UK seeing stubbornly high domestic inflation coupled with a worsening export trend, risks seem skewed to the downside,’ Dobson warned.
The UK manufacturing PMI is compiled by S&P Global from responses to surveys sent to purchasing managers at around 650 UK manufacturers, with data collected between April 12 and 25.
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