The UK Markit/CIPS Purchasing Managers’ Index® (PMI®) for the manufacturing sector took a sharp nosedive in May.
Posting atr 45.9 in May from 50.2 in April, new orders dropped at their fastest pace since March 2009, with manufacturers scaling back on employment, purchasing and inventories.
Commenting on the latest figures, CIPS CEO David Noble said:
“The harsh realities of the weak global economy and sluggish domestic demand are bearing down on UK manufacturing resulting in the lowest level of new orders for over three years. This may prove to be a blip, but there is a long way to go before the manufacturing sector recovers fully from the global financial crisis. The sector could well become a drag on the UK economy as it seeks a return to better health.
“This month manufacturers’ reliance on domestic demand was laid bare, as overseas orders also slowed for a second month in a row. As a result, jobs have been affected, with businesses reducing staff for the first time in five months and an increase in redundancy packages. Backlogs too are being worked through to make up for the slump in demand.
“These factors are perhaps some evidence of businesses preparing themselves for the uncertain environment they are operating in and echoes the patterns we saw last year. After an optimistic start to the year, the economic realities have started to bite causing businesses to reign in their activity and manage their costs more effectively, as uncertainty continues.”
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