Manufacturing jobs shed at the fastest pace in six years

1 October 2019

Jobs in the UK manufacturing sector were shed at the fastest pace since February 2013, according to the latest PMI. 

The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index rose slightly to 48.3 in September, up from a seven-year low of 47.4 in August. The index has been below the neutral 50.0 mark for five months, marking its longest sequence in contraction since mid-2009.

While contraction in September was shallower than the previous month, levels of output, new orders, new export business, and employment fell.

Investment goods was the worst-performing sector, experiencing the steepest drops in output and new business due to ongoing economic and political uncertainty.

Production in the intermediate goods industry stagnated, while the consumer goods sector was the only category to see output rise. However, intakes of new work decreased for both sectors.  

The rate of decline in new export business was much slower than in August, but Brexit uncertainty and firms routing supply chains away from the UK continued to impact foreign demand.

September saw increased levels of input buying as a number of firms reported that purchasing had been raised as part of restarting Brexit stockpiling preparations ahead of 31 October. 

Ongoing weakness within UK manufacturing was reflected in the labour market, with jobs shed at the fastest pace since February 2013. Companies reported that capacity had been reduced due to lower demand and efforts to control costs.

Duncan Brock, group director at CIPS, said: “As the Brexit October deadline came into view, the sector offered two opposing strategies to prepare for the UK’s departure. Where some companies were burning through their levels of materials, others began building stocks up again, fearful of an imminent and abrupt rupture in their supply chains. European clients became more resigned and made concrete plans to move away from UK suppliers and business closer to home seemed more reliable.

“This exhausting set of conditions meant companies shed jobs at a rate not seen since 2013 as redundancy packages were prepared and new staffing plans abandoned. 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.”

Rob Dobson, director at IHS Markit, added: “The rate of job losses accelerated to a six-and-a-half-year high, highlighting how manufacturers are increasingly seeking to cut costs. Similarly, the investment goods sector was especially hard hit in September, seeing the sharpest drops in production and new business, as clients reined in capital spending while conditions remained volatile.”

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