UK manufacturing growth slows, business confidence falls

1st Oct 2024 10:10

(Sharecast News) - Growth in the UK manufacturing sector slowed in September, while business confidence deteriorated amid concerns about the upcoming Budget and geopolitical tensions.

The S&P Global purchasing managers' index printed at 51.5, down from August's 26-month high of 52.5 and in line with the flash estimate.

The PMI has remained above the 50.0 mark that separates contraction from expansion for five months in a row.

The survey also showed that business confidence declined to a nine-month low, with manufacturers adopting a wait-and-see approach when it came to decision making.

Rob Dobson, director at S&P Global Market Intelligence, said the UK manufacturing sector was underpinned by a resilient domestic market.

"However, manufacturers have become more nervous about the outlook, suggesting that the current spell of impressive growth is fading, with business optimism about the year-ahead slumping to a nine-month low," he said.

"The extent of the drop in confidence was striking, beaten only by that seen in March 2020 prior to Covid lockdowns. Uncertainty about the direction of government policy ahead of the coming Autumn Budget was a clear cause of the loss of confidence, especially given recent gloomy messaging, though firms are also worried about wider global geopolitical issues and economic growth risks.

"Price pressures are also becoming a more prominent feature of the survey and a reminder that the inflation genie is not yet back in the bottle. Input cost inflation accelerated to a 20-month high, leading manufacturers to further push up their selling prices. Freight cost rises are a big factor underlying the resurgence in the price measures, as supply chains continue to feel the strain of the Red Sea crisis and global conflicts."