John Glen, Chief Economist of CIPS, has expressed that manufacturing activity has once again experienced a significant decline, marking the sixth consecutive month of contraction, and the rate of contraction is the fastest since May 2020. This suggests that manufacturers are facing challenging times.
The persistent cost pressures brought on by inflation, coupled with systemic weaknesses in the UK and global economy, have also contributed to the sharpest drop in new orders since the financial crisis, excluding the pandemic year.
Manufacturers have been compelled to scale down their operations and reduce their workforce while reassessing their business prospects for the remaining part of this year in a highly competitive economic environment.
However, businesses holding orders have enjoyed their fastest delivery times since January, and the inflation rate has eased to levels last seen in 2016.
Some price adjustments have alleviated manufacturers’ woes, leading to the highest level of optimism about the next 12 months in four months.
As the industry continues to contract, markets are cooling further, presenting policymakers with a headache as they grapple with how to prevent the economy from slipping into a recession.