UK manufacturing sector shrinks - PMI

1st May 2024 08:25

(Sharecast News) - The UK manufacturing sector shrank last month, a closely-watched survey showed on Wednesday, as supply chain disruption hit home.

The latest seasonally-adjusted S&P Global UK manufacturing PMI came in at 49.1, down from March's 20-month high of 50.3.

A reading below the neutral 50.0 is regarded as a contraction, while one above it suggests growth.

Output and new orders both fell, respondents noted, which was attributed to uncertain market conditions, client destocking and supply chain disruption, largely relating to the crisis in the Red Sea.

Input price inflation also rose for the fourth successive month, to a 14-month high.

Rob Dobson, director of S&P Global Market Intelligence, said: "Output and new orders contracted following short-lived rebounds in March.

"The downtown is also sustaining cost caution at manufacturers, leading to lower employment, stock holdings and cutbacks in purchasing activity.

"The news on the prices front is also worrisome for those looking for a sustainable path back to target consumer price inflation, with cost pressures growing in industry and feeding through to higher selling prices at the factory gate."

Peter Arnold, UK chief economist at EY, said: "Lower headline inflation should help the broader recovery become more established, which will offer some support to manufacturers' domestic order books. But the drags from past interest rate increases and tighter fiscal policy will mitigate this boost to household and corporate budgets.

"The EY Item Club expects manufacturing output to pick up this year, but growth is likely to be steady rather than spectacular."