The UK manufacturing sector continues to contract in November, with output, new orders and employment all falling further on the month. Meanwhile, business sentiment also dips to its lowest level since April 2020 as the outlook deteriorates markedly. The only consolation is that inflation pressures are easing a little, with input prices falling to a three-month low. S&P Global notes that:
“November saw a further contraction of the UK manufacturing sector, as weak demand, declining export sales, high energy prices and component shortages all hit industry hard.
“The outlook for the sector also darkened, as confidence among manufacturers fell to its lowest level since April 2020. Weak sentiment and declining intakes of new work led to job losses, a retrenchment in purchasing activity and an accumulation of finished goods inventory that will likely provide a further brake to output during the months ahead. Companies are also reporting rising recession fears, weak consumer spending and subdued client confidence.
“The trend in new export business was especially weak, as Brexit issues and supply chain stresses exacerbated the effects of a weakening global economic backdrop, leading to lower sales from the US, the EU and China. On a slightly more positive note, manufacturers saw a welcome easing in input price inflation . However, firms are still reporting that the direct and indirect impacts of high energy prices remain a major concern.”