UK Manufacturing Shrinks Further

02/10/2012 08:30 AST

U.K. manufacturing sector continued to shrink in September due to weak order inflows and mounting job losses, results of a survey by the Chartered Institute of Purchasing & Supply and Market Economics revealed Monday.

The seasonally adjusted Markit/CIPS Purchasing Manager's Index (PMI) dropped to 48.4 from 49.6 in August. A reading below 50 suggests contraction in the sector.

Companies reported that production was lower during the month due to reduced inflows of new export business and subdued domestic market conditions. New orders increased for the second successive month, but from low levels. Export orders, however, declined for the sixth consecutive month amid weaker demand from the EU and Asia.

Manufacturers were also hurt by rising cost pressures. The average input price inflation rose to a 6-month high due to higher cost of chemicals, energy, foodstuffs, metals, oil and plastics.

Output price inflation was the lowest in eight months as weak demand and strong competition restricted manufacturers' pricing power.

Meanwhile, staffing levels declined for the fifth successive month and the steepest rate since November 2011. Factories shed jobs due to to tough market conditions, lower production and the presence of spare capacity.


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