UK Manufacturing Activity Sinks Deeper Into Contraction Zone


The UK manufacturing sector shrank at a faster pace in March as the strong improvement in supplier delivery times was more than offset by deteriorating new orders and production, final survey results from S&P Global revealed Monday.

The Chartered Institute of Procurement & Supply manufacturing Purchasing Managers’ Index, or PMI, fell to 47.9 in March from February’s seven-month high of 49.3. The flash estimate was 48.0.

The reading has remained below the neutral 50.0 for the eighth successive month.

Production shrank for the eighth time in the past nine months in March. Manufacturers cited subdued market demand, declining new export orders and a preference among companies for reduced inventory holdings as reasons for reducing production.

New business increased only fractionally as a mild improvement in domestic demand was more than offset by a further solid decline in new export orders. Foreign orders contracted for the fourteenth consecutive month on weaker demand from the US, Europe and China.

Average vendor performance improved the most in the 31-year survey history, reflecting better input availability, reduced supply-chain disruption and new capacity coming on stream at suppliers.

Due to reduced output and subdued demand, input buying volumes declined for the ninth month in a row.

Input price inflation slowed to its lowest since June 2020. Output charges also grew at a slower pace as companies maintained efforts to pass on higher costs.

Employment decreased for the sixth month in a row in March. Firms reported redundancies, the non-replacement of leavers and cost saving strategies contributed to job losses.

Optimism among manufacturers rose to the highest for 13 months, with nearly 60 percent forecasting output to rise over the coming year.

The improvement in suppliers’ delivery time should filter through to further cost reductions and lessen the disruption to production workflows in coming months, S&P Global Market Intelligence Director Rob Dobson said.

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