Economic Buzz: UK manufacturing downturn continues as new orders and new export business fall at quicker rates

The UK manufacturing sector continued to face a tough operating environment in August. Weak market conditions, tariff uncertainties and downbeat client confidence all contributed to a sharp drop in new order intakes, with both domestic and overseas demand slumping. The downturn in production volumes extended into its tenth successive month.

The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers? Index (PMI) posted 47.0 in August, down from July's six-month high of 48.0, but below the neutral 50.0 mark for the eleventh month in a row.

Production volumes showed comparative resilience in August. Although the downturn in output continued, the rate of contraction was marginal and only slightly steeper than in the prior survey month. Modest declines were seen in the consumer and investment goods industries, while output rose marginally at intermediate goods producers for the second successive month.

The main factor underlying manufacturing sector weakness was a slump in new work intakes. Domestic demand remained weak and new export business contracted for the forty-third successive month.

The outlook for the manufacturing sector remained relatively mixed in August. Although business optimism among manufacturers rose to a six-month high it was still below its long-run series average.

Tough current conditions combined with an uncertain outlook led to further cutbacks to employment, input buying and stock holdings. Job losses were registered for the tenth consecutive month.

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