UK Factory Activity Logs Further Solid Expansion

(RTTNews) - The UK manufacturing sector continued to expand strongly in September on the back of a resilient domestic market, though the pace growth has eased from August's 26-month high, final survey data released by S&P Global revealed on Tuesday.

The manufacturing purchasing managers' index dropped 51.5 in September from 52.5 in August. However, a reading above 50 indicates expansion. The flash reading was also 51.5.

Among components, output, new orders, and suppliers' delivery times continued to rise amid improved manufacturing operating conditions. On the other hand, employment and stocks of purchases both declined as manufacturers looked to mitigate rising input costs by reducing expenditures in other areas.

Continuing the trend in previous months, export demand was weak in September due to subdued market conditions in Europe, with France and Germany the principal concerns. Lower demand from the US was also a reason for the further fall in export sales.

Firms reduced their workforce numbers in September, reflecting cost reduction initiatives and a more cautious approach from companies amid rising uncertainty about the likely future path for demand.

On the price front, input price inflation accelerated to the quickest since January last year, linked to higher costs for a wide range of raw materials along with increased freight prices due to the re-routing of supply chains away from the Red Sea, which also led to a lengthening of lead times from suppliers for the ninth month in a row.

Looking ahead, the degree of confidence about future output expectations dropped to a 9-month low in September.

"Uncertainty about the direction of government policy ahead of the coming Autumn Budget was a clear cause of the loss of confidence, especially given recent gloomy messaging, though firms are also worried about wider global geopolitical issues and economic growth risks." Rob Dobson, Director at S&P Global Market Intelligence, said.