UK Manufacturing Downturn Continues In September

The downturn in UK manufacturing continued in September, though the latest contraction was the slowest in four months, signaling that the sector is sliding into a recession, monthly survey data showed Tuesday.

The IHS Markit/Chartered Institute of Procurement & Supply manufacturing Purchasing Managers' Index rose unexpectedly to 48.3 in September from August's six-and-a-half year low of 47.4. Economists had forecast the reading to drop to 47.0.

Nonetheless, the headline index has remained below the neutral 50.0 mark for five successive months, its longest sequence below that mark since mid-2009.

Although the contraction was shallower than in August, levels of output, new orders, new export business and employment fell further as rising political, trade and economic uncertainties exacerbated concerns about Brexit.

Companies cut back production in response to a further reduction in order intakes. There were lower inflows of new work from both domestic and overseas markets. Brexit uncertainty and clients routing supply chains away from the UK still impacted on foreign demand.

Reflecting lower demand, efforts to control costs and redundancies, staffing levels declined at the fastest pace since February 2013.

Firms again raised purchasing as part of Brexit preparations. Inflationary pressures remained relatively contained, as rates of increase in input costs and selling prices both eased.

Business optimism remained at a subdued level in September, despite improving from the series-record low.

"Brexit combined with a slowdown in the global economy, rising trade tensions and potential oil supply difficulties in the Middle East, means we're likely to see a chilling end to the last quarter as Halloween approaches," Duncan Brock, group director at the CIPS, said.