UK manufacturing contracts in November as political and economic uncertainty continues

According to the report from IHS Markit/CIPS, the UK manufacturing downturn continued in November, as businesses responded to the delay to Brexit and a fresh injection of uncertainty from the forthcoming general election. Output, new orders and employment all fell, while destocking activity resumed as firms depleted buffers built up in advance of the postponed exit date.

The headline seasonally adjusted manufacturing PMI slipped to 48.9 in November, down 49.6 in October but above the earlier flash estimate of 48.3. The PMI has remained below the neutral mark of 50.0 for seven successive months.

November saw a reduction in manufacturing output, with the rate of decline accelerating slightly over the month. Companies reported scaling back production in response to lower new order intakes. New orders fell for the seventh month in a row during November, reflecting tougher conditions in both domestic and overseas markets.

November saw manufacturing employment fall for the eighth straight month, with the pace of job losses the steepest since September 2012. Companies linked further cuts to cost reduction efforts, efficiencies, Brexit uncertainty, redundancies, natural wastage and staff restructuring.

November saw average selling prices increase for the forty third month in a row. However, charge inflation remained relatively mild overall, with the rates over the past three months among the weakest during the current sequence of increase. Input costs decreased – albeit marginally – for the first time since March 2016, linked to lower global commodity prices and exchange rate effects