UK manufacturing downturn eases in November

Business conditions in the UK manufacturing sector edged closer to stabilisation in November, as levels of new work held broadly steady and production posted a modest increase. However, trends in output were uneven across the sector, with contractions at capital and intermediate goods producers offsetting strong growth in the consumer goods sector.

At 49.1 in November, up from October’s three- month low of 47.3, the seasonally adjusted Markit/CIPS Purchasing Manager’s Index® (PMI®) remained below the neutral 50.0 mark for the seventh straight month.


Rob Dobson, senior economist at survey compilers Markit, commented: “Purchasing managers have provided the Chancellor with some better-than-expected news on the performance of the manufacturing economy ahead of the Autumn Statement. However, the sector is merely stabilising, suggesting that the economy is still showing no signs of rebalancing towards goods production and exports and that manufacturing is unlikely to help prevent a possible slide back into contraction in the fourth quarter.

“Subdued domestic market conditions and declining export orders mean producers remain focused on keeping costs as low as possible. Employment, purchasing and stocks are all therefore continuing to be cut, which is likely to drag on the wider economy in the coming months.”

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “The most that we can say about November’s manufacturing performance was that it was simply less bad than the previous month. Although the sector is stabilising, it is still being battered on two fronts – with depressed domestic demand and weak demand from key markets overseas – particularly Europe and the US.

On a positive note Noble said: “Increased output and consistency in new orders helped to steady the sector in November,” whilst “consumer confidence looks like it is translating into increased demand for consumer goods.”

Commenting on yesterday’s PMI data, Andrew Johnson, senior economist at EEF, the manufacturers’ organisation, said: “The pick up in today’s data is somewhat better news than we have seen in recent months but, overall, the subdued trend in manufacturing activity looks to have continued through the final quarter of this year.

“Recession in the eurozone is having a major dampening effect on demand, leading to a more cautious approach to recruitment and investment. The clear message is that a sustained industrial recovery and its contribution to better balanced growth still seems some way off.”


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