UK Manufacturing shrinks further amid uncertainty

The UK’s manufacturing sector has shrunk to its fastest pace since 2013, businesses are feeling the fallout from recent political and economic uncertainty.

According to a new survey, IHS Markit/CIPS Purchasing Manager’s Index (PMI) gave a score of 47.5 in December, anything below 50 is a contraction.

Commentators are still awaiting greater clarity from the government over Brexit plans and the future trading relationships whilst, businesses are waiting for clarity from the government before spending in the manufacturing sector.

Rob Dobson, director at IHS Markit, which compiles the survey said, “New order inflows decreased and Brexit safety stocks were reduced.

“With demand weak and confidence remaining subdued, input purchasing was pared back sharply and jobs cut for the ninth successive month.

“The downturn is still being hardest felt at companies reliant on investment and business-to-business spending.”

He added there was a slight uptick in consumer goods production, but this was not enough to offset the falls elsewhere in the sector.

“On this basis, it looks like UK manufacturing and the broader economy may both start the new decade as they began the last, too reliant on consumer spending and still waiting for a sustained improvement in investment levels.”

In December employment was reduced in manufacturing for the ninth successive month in December causing confidence levels to remain far below than what was recorded in November.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply said, “The pace of manufacturing’s decline in December will set alarm bells ringing as production levels sank at their fastest levels since July 2012 and with no sign of immediate recovery in sight.

“In the closing stages of the year the sector has ended on a dreary note. Though the result of the general election will bring some clarity to businesses, it still feels like a long road ahead for manufacturing to recover its losses from this year and there will still be some obstacles to overcome in 2020.”