UK manufacturing shrinks at fastest rate since mid-2020 – PMI

People shop in Selfridges department store on Oxford street, as the coronavirus disease (COVID-19) restrictions ease, in London, Britain April 12, 2021. REUTERS/Henry Nicholls/File photo

LONDON  – British manufacturing last month suffered its biggest contraction since the depths of the first COVID-19 lockdown in May 2020, with optimism draining fast, a survey showed on Tuesday.

The final S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) for October fell to 46.2 from 48.4 in September. While the October figure was revised up from an initial “flash” reading of 45.8, it still marked a 29-month low.

The survey’s gauge of future output fell to its lowest level since April 2020.

Overall, the PMI chimed with other leading indicators of Britain’s economy that point to a worsening slowdown underway – something that is likely to concern Bank of England officials who look set to raise interest rates markedly on Thursday.

Britain’s economy is on the cusp of recession as households and businesses wrestle with rising energy costs, a jump in borrowing costs and volatile financial markets.

Manufacturers in other major European economies are also struggling.

“Business optimism dipped to a two-and-a-half year low, as weak demand, recession fears, inflationary pressures and rising uncertainty hit confidence,” S&P Global said.

The survey’s gauges of input cost inflation and selling prices inched lower in October, but was still high by historic standards.

Manufacturing employment fell for the first time since November 2020, the PMI showed.