''Bleak winter'' for manufacturing sector

1 December 2011

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1 December 2011 | Adam Leach

Activity in the UK manufacturing sector declined for the second month running as production stalled after customers tightened the reins on spending.

The Markit/CIPS Manufacturing PMI for November reported a figure of 47.6, the most severe decline in the sector since June 2009. The report, which is based on responses from senior purchasing managers, found that the drop in production was caused by reduced orders as clients tightened the purse strings in response to weak economic conditions. New export business also dropped as demand from Europe, the US and the comparatively strong Asian market dropped.

According to CIPS CEO David Noble, the sector is in for a gloomy period over the cold months. “It looks like it’s going to be a bleak winter for UK manufacturers with the PMI showing very little to be positive about at the moment. Export orders, which UK manufacturers are increasingly dependent on, continue to decline as the Eurozone crisis impacts demand in US and Asia as well as Europe.”

The poor performance of the sector over recent times (this was the third reported decline in four months) was felt in the jobs market as companies cut staff and employment fell to its lowest level since October 2009.

Rob Dobson, senior economist at Markit, said: “The manufacturing engine has run out of steam…The lack of new work is forcing manufacturers to rely on previously-placed orders to avoid sharper cutbacks in output and employment. This cannot go on indefinitely and job losses will inevitably mount if order books continue to weaken.”

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