London Daily

Focus on the big picture.

UK factories face tough 2023 after December weakness

UK factories face tough 2023 after December weakness

British manufacturers are starting 2023 on the back foot, after they reported one of their sharpest falls in activity since the 2008-09 recession last month, reflecting a sharp fall in new orders and ongoing job cuts.
The S&P Global/CIPS UK manufacturing Purchasing Managers' Index (PMI) sank to 45.3 in December from 46.5 in November, its lowest since May 2009 apart from two months at the start of the COVID-19 pandemic in 2020.

Tuesday's reading was stronger than an initial estimate of 44.7 released last month, but well below the 47.8 reported in the equivalent euro zone survey on Monday.

"Output contracted at one of the quickest rates during the past 14 years, as new order inflows weakened," S&P director Rob Dobson said. "The decline in new business was worryingly steep, as weak domestic demand was accompanied by a further marked drop in new orders from overseas."

The figures broadly chime with a gloomy outlook issued last month by trade association Make UK, who forecast output in the sector would fall 3.2% in 2023. The latest official data shows factory output in October was 4.6% lower than a year before.

"These results are the latest in a series of weak indicators ... which suggest that GDP likely fell again in Q4 2022. Furthermore, with the squeeze on household and corporate finances set to continue, the situation is unlikely to improve in the near future," said Martin Beck, chief economic advisor to the EY ITEM Club.

Government budget forecasters predicted in November that the British economy as a whole would shrink 1.4% this year as businesses and households continue to face high inflation.

Separately, chief financial officers at major British companies reckon that higher interest rates mean now is the worst time for companies to borrow since the financial crisis 14 years ago, according to a quarterly survey from Deloitte.

Manufacturers in the monthly PMI survey were slightly more upbeat about the year ahead. Expectations of future output rose to a five-month high as supply chain difficulties became less acute and inflation pressures fell to the lowest since late 2020.

But factories still cut jobs by the most since October 2020, as orders fell from both domestic customers and clients in China, the United States, mainland Europe and Ireland.

"The main driver of lost export contracts was weak global economic conditions, while there was also mention of Brexit-related issues, such as shipping delays and higher costs, leading some EU clients to source products elsewhere," survey compiler S&P Global said.
Newsletter

Related Articles

London Daily
0:00
0:00
Close
Homeless Displaced in Edinburgh to Accommodate Taylor Swift Fans
Public Uptake of AI Tools Remains Limited
New Tax Rules on Second Homes in the UK to Address Housing Crisis
Can Europe Transition to a War Economy?
France Implements Stricter Airbnb Regulations
Upcoming Pandemic Inevitable, Warns Former UK Chief Scientific Advisor
British Tourists Assaulted by Bouncers in Pattaya, Thailand
Facebook Delays Removal of Fake Account Exploiting TikTok Star
Billionaire Non-Domicile Flees UK Amid Tax Law Changes
Theresa May Admits Mistakes Over Immigration Policies
Nicki Minaj's Manchester Concert Canceled After Amsterdam Arrest
UK Conservative Party Proposes Mandatory National Service at 18
Kate Middleton's Public Absence Throughout 2024
Asylum Seekers Arriving In UK by Sea Exceed 10,000 This Year
UK Criticizes ICJ Order on Israel's Rafah Assault
Ukraine's Fight Against Corruption Gains Ground Amid War
Czech President Petr Pavel Injured in Motorcycle Accident
Record Number of Abortions in England and Wales
Paul McCartney Honours Bruce Springsteen at Ivor Novello Awards
US and UK to Reject ICJ Ruling on Israel's Rafah Offensive
World Court Orders Immediate Halt to Israeli Offensive in Gaza
Understanding FLiRT COVID Variants and Their Impact
Baltic NATO Members to Construct 'Drone Wall'
Global Life Expectancy Dropped By 2 Years Due To COVID-19
Macron Halts New Caledonia Voting Reform After Riots
Rishi Sunak Shelves Rwanda and Smoking Policies Ahead of Election
US Refuses World Court Jurisdiction
China Conducts Surprise Military Drills Around Taiwan
Grim Polls Predict Major Loss for PM Rishi Sunak
Rishi Sunak's Campaign for UK Election: Key Issues Highlighted
German Property Crisis Worsens as Foreign Investment Declines
Princess of Wales's Taskforce Calls for Business Investment in Early Childhood
Campaign Groups Condemn UK Report on Protests
Former Royal Marine Charged with Espionage Found Dead
Australian PM Calls for Julian Assange's Freedom
ICC Seeks Arrest Warrants for Israeli and Hamas Leaders
UK's Infected Blood Scandal: Conclusion Nears After Seven Years
Julian Assange Granted Right to Challenge US Extradition
Congo Army Thwarts Attempted Coup Involving Americans and a British Citizen
Ireland's Homeless Gain Voting Rights
Blinken orders crackdown on Israel-Hamas leaks
Julian Assange Faces US Extradition: Key Facts
Jacob Zuma Takes Campaign to ANC Stronghold Soweto
Attempted Assassination of Slovakia PM Robert Fico: Investigation Ongoing
What Happens If an Iranian President Dies in Office?
Spain Recalls Ambassador After Argentina President's Remarks
Rishi Sunak Faces Cabinet Backlash Over Proposed Changes to Foreign Student Visas
Rwanda Denies Entry to Human Rights Researcher
Iranian President Ebrahim Raisi Reportedly Killed in Helicopter Crash
Blue Origin Resumes Space Tourism with 90-Year-Old Ed Dwight
×