UK manufacturers reported cutting jobs at the fastest pace since 2012 as they were “squeezed between a rock and hard place”, and reducing their stocks as new orders faltered, according to a closely watched industry survey. The IHS Markit/CIPS Purchasing Managers’ Index for manufacturing slipped to 48.9 in November, down from 49.6 in October, but above the earlier flash estimate of 48.3.A reading below 50 indicates a majority of businesses reporting falling output. The contraction in activity resulted in a fall in jobs with the employment sub-index dropping to 46.81 in November, the lowest level since September 2012. “November saw UK manufacturers squeezed between a rock and hard place, as the uncertainty created by a further delay to Brexit was accompanied by growing paralysis ahead of the forthcoming general election” said Rob Dobson, director at IHS Markit. Duncan Brock, group director at the Chartered Institute of Procurement & Supply said the result was that companies “tried to balance their books by reducing overheads and improving efficiencies quickly, and staff numbers were the casualties”.Businesses reported scaling back production in response to lower new order intakes. Managers taking part in the survey attributed this to destocking at clients following the delay to the October 31 Brexit deadline as well as the uncertainty in the global trade situation. “Supply chain managers cited weakened domestic demand and one of the biggest falls in export orders for seven years as companies unravelled their pre-Brexit stocks and resulting in one of steepest reductions in purchasing since 2013,” Mr Brock, said. The sub-indices of the stock of finished goods and new exports both dropped to below 47 in November from more than 51 in October. The new exports reading was its seventh consecutive monthly contraction.The deterioration in UK manufacturing activity was in contrast with signs of the industrial downturn bottoming out in other major producers.In November, the eurozone PMI index for manufacturing rose to a three-month high while remaining weak, and improvements were registered in China, Japan and South Korea. Investment goods producers in the UK were the worst performers with a corresponding sub-index score of 46.43, well below the sector average. In contrast, consumer goods activity pointed to a weak expansion. “The weakness was reported most pronounced in the investment goods sector, adding to the evidence that businesses continue to hold back on investment amid a number of uncertainties and a currently struggling economy” said Howard Archer, chief economic adviser at the consultancy EY Item Club. Manufacturing output has been highly volatile throughout this year, rising solidly in the first quarter as companies piled stocks ahead of the initial Brexit deadline on March 29, but contracting in the second quarter and flat in the three months to September.
Lucille Grant ● 2533d