According to S&P Global, the UK’s seasonally adjusted purchasing managers’ index (PMI) dropped from 47.9 in March to a three-month low of 47.8 in April 2023. It was, however, higher than the 46.6 flash estimate from earlier. Production, new orders, employment, and inventories of purchases—the five components of the PMI—all showed deteriorating operational conditions. Lead times for vendors have also decreased, indicating a decline in input demand that hurts suppliers.
In April, manufacturing output decreased for the second consecutive month. Despite this, the rate of contraction remained low and was marginally less severe than in the month before the survey. Production increased at producers of investment products but decreased at those of consumer and intermediate goods. Companies claimed production has decreased due to decreased new work from local and foreign clients.
After increasing for the first time in nearly a year during March, the total volume of new orders declined the fastest in three months in April. According to the S&P Global / CIPS UK Manufacturing PMI survey, attempts to reduce costs, customer destocking, and heightened client uncertainty all contributed to the decline in new work placed. Meanwhile, weaker demand from the US, China, and mainland Europe decreased new business from abroad. There were fewer new export orders for the fifteenth month running, and the rate of decline accelerated. Sector-specific data, however, offered a more nuanced picture. New export work for manufacturers of consumer and intermediate products continued to fall, while growth in the investment goods sector reached a 20-month high.
Additional job losses at UK manufacturers occurred in April. Despite declining at its slowest rate in that span, employment fell for the seventh consecutive month. The staff reduction targeted medium- and large-sized businesses. On the other hand, small-scale producers increased engagement for the fourth straight month. Although the environment is still tepid, manufacturers kept a positive outlook in April. Optimism reached a 14-month high, with more than 61% of businesses anticipating rising production in the upcoming year. Cheerful optimism was reflected in investment spending, the introduction of new products, expectations for better market conditions, and plans for organic expansion.
For manufacturers, there was good news on the supply and pricing fronts as well. Average input cost growth rates and average output charge growth rates slowed in April, reaching 35- and 28-month lows, respectively. Companies attributed slower cost growth to decreased supply chain stress, better material accessibility, reduced transportation costs, and weaker input demand.
In April, vendor delivery times decreased for the third consecutive month, indicating supply chain constraints lessened after the significant interruptions encountered for many of the previous three years. Improvements in the availability of materials, higher stock levels at suppliers, and indications that vendors were clearing backlogs and bottlenecks were all mentioned. The study also said shorter delivery times resulted from lower raw material demand.
For the eighth month, input purchasing volumes at UK manufacturers decreased in April. Purchasing activity was reduced due to decreased production demands and measures to mitigate excessive stock inventories. During the most recent survey month, lists of both inputs and finished items fell.
