The UK manufacturing activity continued to contract in October with downturns in production and new orders curtailing job creation and economic uncertainty and the cost of living crisis pushed sentiment to a 10-month low, final survey results from S&P Global revealed on Wednesday.
The Chartered Institute of Procurement & Supply final manufacturing Purchasing Managers’ Index, or PMI rose to 44.8 in October.
The reading was below the initial estimate of 45.2, but remained above September’s level of 44.3.
Five sub-components of the PMI signaled deterioration in operating conditions. Production declined for the eighth consecutive month, reflecting client destocking and falling intakes of new work.
Manufacturers were buffeted by tough market conditions both at home and overseas. Orders fell for the seventh month in a row.
Firms cut back their purchasing activity and reduced stocks of purchases and finished goods inventories.
Manufacturing jobs decreased for the thirteenth consecutive month in October. The fall was sharper than the average for the current sequence of decline.
Business optimism retreated to a ten-month low in October amid concerns about consumer uncertainty, the cost of living crisis and tough market conditions.
Both input costs and output charges decreased in October. Purchase prices dropped for the sixth consecutive month, while selling prices declined for the fourth time in the past five months.
Rob Dobson, Director at S&P Global Market Intelligence, said brighter inflation outlook comes at the cost of increased recession risk, being a symptom of the broader weak demand malaise.
The Bank of England had paused its policy tightening in September after raising the interest rate at each and every rate-setting meeting since December 2021.
At 5.25 percent, the interest rate was the highest since early 2008. The bank is likely to keep the rate unchanged again at 5.25 percent on November 2.