Factory output drops at fastest rate since 2012

Will Green is news editor of Supply Management
16 December 2019

UK manufacturing output has dropped at the fastest rate in almost seven-and-a-half years, according to a flash PMI.

The flash PMI, based on around 85% of usual monthly responses, attributed lower business activity to domestic political uncertainty, lack of Brexit clarity and subdued global economic conditions.

The IHS Markit/CIPS Flash UK Composite Purchasing Managers’ Index recorded 48.5 in December, down on 49.3 in November and against the neutral reading of 50.

December data pointed to lower volumes of service sector output, but manufacturing dropped at the fastest rate since July 2016.

Duncan Brock, group director at CIPS, said: “European orders continued to dry up along with new jobs as the addition of a slowing global economy made trading conditions all the more challenging for both sectors.

“However the biggest shock came in the form of the worst output performance from the manufacturing sector since July 2012. A lack of new orders and the unravelling of pre-Brexit inventories hampered progress and supply chain managers’ purchasing dropped at the fastest pace since 2009 in the absence of a pipeline of work ready and waiting.

“Service companies had challenges of their own in the form of another modest rise in costs for food and fuel.

“Any vestiges of hope are now pinned on the election results as the potential for reducing uncertainty may restore confidence in the months ahead. But the Brexit path is still littered with obstacles and the need for strong negotiation skills for a future EU agreement will be paramount to avoid this downward slide becoming the economic landscape for an extended period.”

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