UK manufacturing jobs fall at the quickest rate for more than seven years

Manufacturing jobs fell at the quickest rate for more than seven years in November.

Companies were “squeezed between a rock and a hard place” by uncertainty related to another Brexit delay and the 12 December general election according to analysts IHS Markit.

Employment fell for the eighth straight month in November, with the pace of job losses the steepest since September 2012. Firms linked cuts to cost reductions, Brexit uncertainty, redundancies and natural wastage. Weakened domestic demand and one of the biggest falls in export orders for seven years resulted in one of the steepest reductions in purchasing since 2013, said Duncan Brock, group director at the Chartered Institute of Procurement & Supply (CIPS).

“Inevitably, where new orders fall, jobs are sure to follow and manufacturing employment fell at its fastest pace since September 2012. Firms tried to balance their books by reducing overheads and improving efficiencies quickly, and staff numbers were the casualties.”

The seasonally adjusted Purchasing Managers’ Index (PMI) released by Markit and CIPS today (2 December) was 48.9, down from 49.6 in October. It has remained below the neutral mark of 50 for seven successive months.

Manufacturing output fell in November, with the rate of decline accelerating slightly over the month. Companies scaled back production in response to fewer orders. Firms tried to reverse high stock holdings, and settle backlogs of work directly from inventories, contributing to the contraction.

New orders fell for the seventh month in a row, reflecting tougher conditions in domestic and overseas markets. Companies said this was because of clients reducing stock following the delay to Brexit and the ongoing uncertainty surrounding the political, economic and global trade situations. The decline in new export orders was among the steepest over the past seven years.

The downturn at investment goods producers remained severe, said the Markit report, with production, new orders, new export business and employment all contracting at steeper rates than other sub-industries. Output, new business and staffing levels also fell at intermediate goods producers. There were brighter signs from the consumer goods sector, which saw growth of both output and new orders.

“November saw UK manufacturers squeezed between a rock and hard place, as the uncertainty created by a further delay to Brexit was accompanied by growing paralysis ahead of the forthcoming general election,” said Markit director Rob Dobson. “Manufacturers across all sectors will be hoping that the New Year brings clarity on the political, trade and economic fronts, providing a more certain foundation to plan and rebuild as the next decade begins.”

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