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The downturn in the UK’s manufacturing sector continued in June, according to survey data on Monday, as demand and output continued to fall.
The S&P Global/CIPS manufacturing purchasing managers’ index worsened to a six-month low of 46.5 points in June from 47.1 in May. The sub-50 reading indicates a continuing contraction in the sector.
However, it was slightly higher than the initial flash estimate of 46.2 points.
Output contracted for the fourth month in a row in June, though at a slightly slower pace. Investment and intermediate goods producers saw a continued downturn, though there was mild growth in output from consumer goods producers.
‘There were reports linking lower production to reduced new order intakes and capacity being above current demand requirements,’ the survey said.
Optimism fell to a six-month low, though 53% of firms still expected growth over the coming year. Respondents reported fears of increasing market uncertainty, of the cost-of-living crisis in the UK hitting demand, and of clients switching to lower-cost rivals or markets.
‘New product launches and planned spending on sales, marketing and capital investment were all expected to boost production over the coming year,’ S&P Global commented.
New export orders continued to fall, amid weaker demand from the US, mainland China, Europe and Brazil. Overall new orders intakes also fell, amid ‘lacklustre’ domestic demand.
Employment fell for the ninth month in a row, at the sharpest pace since March. ‘Job losses also reflected weaker demand, redundancies and cost management initiatives,’ the survey noted.
Rob Dobson, S&P Global Market Intelligence director, said: ‘The UK manufacturing sector continued to report recessionary conditions in June.
‘Although some respite is being offered in the short-term by reduced pressures on supply chains and costs, these remain a symptom of the current weakness of demand faced by the sector and are therefore unlikely to play a role in boosting production moving forward.
‘Manufacturers therefore remain in defence mode, looking to cut back spending on purchasing and employment wherever possible and release capital tied up in stocks.’
The UK manufacturing PMI is compiled by S&P Global from responses to surveys sent to purchasing managers’ at around 650 manufacturers, with data collected between June 12 and 27.
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