(Alliance News) - The UK manufacturing sector contracted for the fifth month in a row in February, and job losses intensified to the steepest level since mid-2020, survey results on Monday showed.
The UK S&P Global manufacturing purchasing managers' index fell to 46.9 points in February, from January's 48.3. With the latest reading falling further from the 50 point neutral mark, the survey suggests the decline in the UK manufacturing sector worsened.
The reading topped the flash estimate of 46.4 points, however. It was the fifth month that the PMI has been below the 50 point mark, S&P Global added. It also represented a 14-month low for the PMI.
S&P Global added: "The home market was mainly downbeat due to a combination of rising cost pressures, an associated lack of willingness to spend among customers and the impact of policy changes announced in last year's autumn budget. New export business meanwhile fell at the quickest pace in a year, amid reports of reduced new order intakes from Brazil, Europe (with specific references to Germany), the Middle East and the USA. Overseas market conditions were reported to be generally quiet overall.
"The weakness signalled by the latest figures was widespread, with all three of the sub-industries covered by the survey (consumer, intermediate and investment goods) seeing production, new business and foreign demand decline. Consumer goods was the worst performing sector overall, registering the steepest drops in all three of those variables."
Manufacturing sector weakened "filtered through" to the labour market, S&P Global added, as job cuts hit the loftiest level since May 2020.
"The latest round of job losses reflected weak demand, cost control initiatives and restructuring in response to changes in both the minimum wage and employer national insurance contributions," S&P Global added.
Employer national insurance contributions are to rise in April, according to measures announced in the UK autumn budget in October. Price pressure continued to intensify, partly due to the upcoming NI hike, S&P Global added.
"Underlying price pressures continued to climb in February, with rates of inflation in input costs and output charges both accelerating. Higher purchase prices were linked to suppliers front loading expected increases in their own costs (such as higher minimum wages and employer NICs), material
shortages and general price inflationary pressures. Selling prices meanwhile rose to the greatest extent since April 2023, reflecting the pass through of current and expected cost increases to clients, higher staff costs and increased tax burdens," the survey's publisher said.
Nonetheless, hopes for the future perked up last month.
"Business optimism rose to a six-month high in February. Improved sentiment was attributed to investment spending, marketing initiatives, new products and projects, planned diversifications and hopes economic conditions would strengthen," S&P Global added.
The survey features a panel of 650 manufacturing firms in the UK, with responses collected in the second half of the month.
The services and wider composite PMIs are released on Wednesday.
By Eric Cunha, Alliance News news editor
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