Downturn in UK manufacturing sector deepens in May
By Michele Maatouk
Date: Thursday 01 Jun 2023
(Sharecast News) - The downturn in the UK manufacturing sector deepened in May, according to a survey released on Thursday.
The S&P Global/CIPS purchasing managers index fell to a four-month low of 47.1 from 47.8 in April, but was above the flash estimate of 46.9.
A level above 50 indicates expansion, while a reading below signals contraction.
The survey found that manufacturers were hit by weak domestic market sentiment, lower new export order intakes and client destocking, which offset the tapering benefits from improving supply chains.
New export orders fell for the sixteenth consecutive month in May, as overseas demand for UK manufactured products remained lacklustre.
On the upside, however, average input prices fell for the first time in three-and-a-half years.
Rob Dobson, director at S&P Global Market Intelligence, said: "Manufacturers are finding that any potential boost to production from improving supply chains is being completely negated by weak demand, client destocking and a general shift in spending in the UK away from goods to services.
"These factors are also driving a broad decrease in demand from overseas amid reports of lost orders from the US and mainland Europe. The retrenchment in export demand is also being exacerbated by some EU clients switching to more local sourcing to avoid post-Brexit trade complications.
"Although near-term conditions remain challenging overall, manufacturers are still finding reasons for optimism including brighter news on the price and supply fronts. Average input costs fell for the first time in three-and-a-half years, allowing some firms to maintain efforts to repair and protect margins damaged by a long and often severe period of cost inflation. The recent healing in global supply chains is also continuing apace, with lead times shortening to a near record extent in May."
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