These are two findings from the seasonally adjusted S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI), which was down to 47.8 in April from 47.9 in March.
All five PMI components signalled a deterioration in operating conditions: output, new orders, employment and stocks of purchases all contracted, although vendor lead times improved.
Manufacturing production fell for the second consecutive month in April, but the rate of contraction remained mild and slightly less marked than in March. Output rose in the investment goods sector but fell at consumer and intermediate goods producers. Companies reported that output was scaled back due to reduced intakes of new work from domestic and overseas clients.
April saw further job losses for the seventh month in a row with headcount reduction focussed on medium- and large-sized companies. Small-scale producers raised employment for the fourth successive month.
Although current conditions remained subdued, manufacturers maintained a positive outlook in April with over 61 per cent of companies reporting that they expect output to rise during the coming year. Positive sentiment is reflected in investment spending, new product launches, forecasts of improved market conditions and organic growth plans.
Rates of increase in average input costs and output charges both eased in April, falling to 35- and 28-month lows respectively. Companies linked slower cost increases to reduced supply chain pressure, improved material availability, declining shipping rates and weaker demand for inputs.
Commenting on the latest data, Maddie Walker, Industry X lead at Accenture, UK said: “These results are a reminder that it is going to be a rocky road to recovery for the UK’s manufacturing sector. However, it’s positive to see an optimistic outlook remaining amongst companies, with widespread expectation that output will rise during the coming year. It’s also encouraging to see cost increases starting to slow as well as delivery times shortening, in a sign that some of the supply chain issues that have defined the sector for the past few years are starting to ease.”
“Whilst some input costs have fallen, UK energy prices remain significantly in excess of those in North America and the Far East, placing ongoing pressure on UK competitiveness,” added Glynn Bellamy, UK head of industrial products, KPMG. “Given these dynamics, UK manufacturing needs an upturn in global consumer confidence to lead to more big ticket purchasing, but manufacturers will be acutely aware how volatile the global consumer landscape remains, particularly with the ongoing uncertainty over future interest rate rises.”
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