Manufacturers face toughest conditions since records began

30 September 2008
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01 October 2008 | Paul Snell

Activity in the UK manufacturing sector fell to its lowest level in the history of the Purchasing Managers' Index last month.

The survey of industrial buyers by CIPS and Markit, where a figure below 50 represents contraction, recorded a figure of 41 in September, significantly down compared with August's figure of 45.3. Manufacturers blamed weak domestic demand, with clients cancelling or postponing orders, and a fall in international business.

Output also shrank at its fastest rate in the survey's 17-year history, reaching 41.2 in September. This compared with the 47.6 recorded the month before. New orders also suffered a severe drop, reaching 36.1 last month. The index also showed that backlogs of work were also starting to run down, reaching 37.3 in September, also a series low.

Employment suffered as a result of the decline in activity, reaching 40.1, the lowest-ever figure recorded. Companies reported they were cutting jobs to reduce costs and to meet the falling amount of production.

Output prices continued their strong growth, although slowed slightly compared to the record high posted in August. The figure of 62.6 was attributed to manufacturers passing on increased input costs. Input prices were at their lowest level for seven-months, but still increased to 73.7 last month. Buyers said high oil costs were still being passed down to them in the increased price of chemicals, energy and transport.

Further coverage of PMI reports is available at www.supplymanagement.com/pmi

SMoct2008

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