The UK’s manufacturing industry’s output faced its largest decline since the height of the pandemic last month, driven by falling orders both domestically and from abroad.
The month of August saw the steepest decline in manufacturing production since May 2020, according to figures from the latest S&P Global/CIPS UK Manufacturing Purchasing Managers' Index (PMI).
Supply chain issues, port congestion, Brexit-related complications and inflationary pressures also contributed to the fall in orders from overseas, according to the report.
The index fell to 47.3 in August, down from 52.1 in July – the first time this number has fallen below 50 since May 2020.
However, this was an improvement on the earlier ‘flash’ estimate in late August, which predicted that activity would fall to 46.0 on the index, according to The Guardian.
Any number above 50 usually corresponds with growth, and a reading below 50 normally indicates contraction.
“August saw the UK manufacturing sector suffer its steepest downturn since the first COVID-19 lockdown,” said Rob Dobson, director at S&P Global Market Intelligence.
“Output and new orders contracted at the fastest rates since May 2020, as inflows of work from both domestic and export markets slumped sharply lower.”
Sky News reports that one positive from the data was the reduction of manufacturers’ input costs – with raw material prices, containers, and electronics all decreasing by their biggest margin since November 2020.
Dobson said: “there was better news on prices, however. Although still elevated, rates of input cost and selling price inflation both eased sharply, which could take some considerable pressure off consumer price inflation in the coming months.”
According to Reuters, global factory output also took a hit from the effects of China’s zero-Covid policy and the war in Ukraine, causing residual supply chain issues.
Manufacturing activity was weak across a host of different countries, including China, the US and Germany, but input prices in China and Taiwan saw their first fall since May 2020.