The UK manufacturing sector continued to face tough operating conditions in February, as ongoing concerns about weak demand and rising cost pressures led to deeper downturns in output, new orders and employment.
The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) fell to a 14-month low of 46.9 in February, down from 48.3 in January but above the earlier flash estimate of 46.4.
The PMI has remained at a sub-50.0 level, signalling contraction, for five months in a row.
Output contracted for the fourth month running in February, as manufacturers scaled back production in response to lower new order intakes, subdued client confidence (at both businesses and consumers) and supply chain issues. Companies faced weaker demand from both domestic and overseas clients.
The home market was mainly downbeat due to a combination of rising cost pressures, an associated lack of willingness to spend among customers and the impact of policy changes announced in last year's Autumn Budget.
The deepening downturn at manufacturers filtered through to the labour market in February, with the latest data signalling the steepest cut to employment in the sector since May 2020.
Cost and demand considerations were also the principal factors underlying the latest cutbacks to purchasing activity and stock holdings.
Underlying price pressures continued to climb in February, with rates of inflation in input costs and output charges both accelerating.
Business optimism rose to a six-month high in February. Improved sentiment was attributed to investment spending, marketing initiatives, new products and projects, planned diversifications and hopes economic conditions would strengthen.