Engineering news
The manufacturing sector has dipped to a three month low in September, rounding off one of its weakest quarters during the past two years, according to the latest Purchasing Managers Index (PMI) survey.
The survey of activity in the manufacturing sector produced by Markit found that UK manufacturing PMI dipped to 51.5 in September from 51.6 the previous month.
The survey found that generally subdued trends in both output and new orders during recent months filtered through to the labour market, with manufacturing job losses registered for the first time since April 2013.
The PMI has now posted above the 50.0 no-change mark for 30 months running. However, the pace of growth signalled during quarters two and three of this year have been weaker than those generally seen earlier in the current growth sequence.
Markit noted there was also noticeable variation in the trends between the manufacturing sub-sectors. Consumer goods producers – the star performer in recent surveys – saw a substantial output growth slowdown and a contraction in new order inflows for the first time in almost three-and-a-half years.
In contrast, intermediate goods producers saw a solid increase in output and investment goods production returned to growth. These trends were not repeated for employment, however. Consumer goods sector headcounts rose, investment goods producers made little change in staffing levels and job cuts were signalled by intermediate goods companies.
Rob Dobson, senior economist at Markit, said: “The UK manufacturing sector remained sluggish at the end of the third quarter, stunned by a triple combination of a sharp slowdown in consumer spending, weak business investment and stagnating export order inflows. The survey is still broadly consistent with stagnation, or even a mild downturn, when compared to official data.
“Although some respite will have been felt through a sharp decrease in average input costs, the steepest in over 16 years, the generally lacklustre operating environment nonetheless encouraged firms to scale back employment for the first in two and-a-half years. Job cuts send a signal that manufacturers are becoming more cautious about the future, which may lead to a further scaling-back of production at some firms in coming months.
“The ongoing malaise of the manufacturing sector will add to broader growth worries and supports dovish calls for a first rise in interest rates to be held off until industry returns to a firmer footing.”
Commenting on the PMI data, Zach Witton, deputy chief economist at EEF, the manufacturers’ organisation, said: “Today’s data suggests the challenging export environment and weak demand for investment goods in the oil and gas sector has started to take a toll on business confidence, especially the fact manufacturing jobs posted losses for the first time in more than two years. There are also signs that domestic demand driven by consumers – a recent key supporter of the PMI - is coming off the boil, with consumer goods producers seeing a substantial slowdown in output growth. Overall, until we see an improvement in export markets, manufacturing will remain under pressure.”