Yahoo Finance UK manufacturing shrinks for sixth month in a row as inflation bites
The UK's manufacturing sector contracted in January for the sixth month in a row as it was hit by inflation, shortages and weak demand.
The S&P Global/CIPS UK Manufacturing PMI scored 47 in January, up from 45.3 in December.
December's score had been a 31-month low for the sector. Anything below 50 on the index means that the sector is contracting.
“UK manufacturers faced a tough operating environment at the start of 2023, leading to reducing intakes of new business, declining production volumes and lower staffing levels,” Rob Dobson, director at S&P Global Market Intelligence said.
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“Weak demand at home and overseas, supply chain constraints, strikes and the continuing impact of high inflation all stymied the performance of manufacturers.
“Weak economic growth in the US, EMEA and across Asia is also dragging down new export wins, exacerbating the strain already caused by port delays and lingering Brexit complications.”
But he added that the contraction was at least slower than it had been towards the end of last year. This was “a possible sign that we may be past the worst of the downturn in industry,” Dobson said.
The index score is calculated from a survey which is filled in by companies across the country.
Glynn Bellamy, UK head of industrial products at KPMG, said: “It will be some months yet until manufacturers feel that the UK economy has turned the corner, but the first small signs that inflation may have peaked increased optimism slightly in January about cost pressures lowering soon and continuing to fall as the year goes on.”
Meanwhile, costs were rising slower than they had in December, and delays in supply chains were the shortest for three years.
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Maddie Walker, managing director at Accenture, added: “It’s a mixed landscape for manufacturers right now. There are signs from across the economy that inflation is easing. However, the impact continues to be felt as energy costs and pricing remain well above the average that businesses have gotten used to.
"Certain industries, such as car production, also continue to be hampered by semiconductor shortages and factory closures."
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