After some signs of improvement in November, the downturn in the UK manufacturing sector deepened in December, according to the IHS Markit/CIPS UK Manufacturing PMI®, which read 47.5.
Production fell in response to declining intakes of new work from both domestic and overseas markets and at the sharpest pace in close to seven-and-a-half years.
The investment goods category contracted at the steepest rate in more than seven years.The declines in domestic and export orders in this sector were the sharpest in more than a decade. Production in the intermediate sector contracted at the fastest rate in five months. The consumer goods category saw marginal expansion.
Overall new work declined for the eight successive month, with new export business falling for the second month running. The consumer category alone recorded improved intakes of new business from domestic and export markets.
Manufacturing employment reduced for the ninth successive month, albeit at the weakest pace since August. Losses were recorded in all three manufacturing categories and across SME to large companies.
Input prices rose slightly for the first time in three months and output prices rose to the greatest extent in six months. Holdings of purchased and finished goods inventory decreased, as did input buying volumes, as firms reduced Brexit safety stocks.
Nevertheless, business sentiment remained reasonably positive in December. More than 43% of the companies surveyed forecast higher output in twelve month’s time, with only 10% expecting a contraction.