Data shows manufacturing decline

The latest Purchasing Managers Index from the Chartered Institute of Purchasing and Supply (CIPS)/Markit suggests that manufacturing has fallen back below the neutral 50 mark.

The survey, based on data for new orders, production, employment, suppliers' delivery times and stocks of purchases, shows a seasonally adjusted drop to 49.7 from 50.2 reported in July. According to the CIPS, a figure above 50 signals growth.

The level of new export business is said to have stabilised and new orders have increased at a slower pace.

‘The future picture for the UK manufacturing sector is still uncertain and concerns will remain that the improvements seen in recent months may have been a temporary rather than a sustainable recovery,’ said David Noble, chief executive officer at the CIPS. ‘Although August saw the trend in output build on the momentum gained at mid-year, the moderation in the rate of new order growth is worrisome.

‘The investment goods sector, in particular, showed surprising vulnerability, as domestic and foreign demand for UK capital products fell back following gains in July.

‘On the back of subdued global demand coupled with strong competition, deflation is still a concern as output prices continued to fall. Subsequently, firms streamlined their practices and reduced levels of stock. Purchasing managers also reported that workforces were trimmed further along with excess capacity and costs, particularly among larger-sized manufacturers.’