UK Manufacturing Downturn Continues In January

(RTTNews) - The UK manufacturing activity continued to contract in January, albeit at a slower pace, due to weak demand, low confidence and rising costs, final survey results from S&P Global showed on Monday.

The final manufacturing Purchasing Managers' Index rose to 48.3 in January from an 11-month low of 47.0 in December. The reading was marginally above the flash score of 48.2.

A score below 50.0 suggests contraction. Operating conditions have deteriorated in each of the past four months.

Manufacturing output dropped for the third straight month, but at the slowest pace during the current sequence. Weak demand and lackluster business and consumer sentiment were the main factors underlying the scaling back of production.

Incoming new business decreased for the fourth month in a row. Conditions remained weak in both domestic and overseas markets. New export business declined throughout the past three years.

Employment in the manufacturing sector decreased for the third successive month and the rate of decline was the quickest for almost a year as companies tried to reduce expenses. This process was often linked to changes to the minimum wage and employer national insurance announced in the Autumn Budget.

Backlogs of work decreased for the thirty-third month in January. Optimism amongst manufacturers came in at one of its weakest in over the past two years, recovering only mildly from the 24-month low hit in December, the survey showed.

Regarding prices, data revealed that input costs and output charges both grew at accelerated rates in January.

"A stagnant economy and rising cost burdens leave policy makers with a real dilemma, balancing the need for rate cuts to support flagging growth and a declining labor market against the need to contain inflationary pressures," S&P Global Market Intelligence Rob Dobson said.