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Despite the better revision, this is still the weakest reading since May 2020 as output, new business and new export orders contract sharply. Job growth is also slowly grinding towards a standstill in the sector, posting its weakest performance in 20 months. Recession much? S&P Global notes that:
“August saw the UK manufacturing sector suffer its steepest downturn since the first COVID-19 lockdown. Output and new orders contracted at the fastest rates since May 2020, as inflows of work from both domestic and export markets slumped sharply lower. There were reports of clients postponing, rescheduling or cancelling agreements due to increased economic uncertainties, recession warnings, rising prices and component shortages, while port congestion and Brexit complications constrained export opportunities.
“The deepening downturn also impacted trends in employment, purchasing and business optimism. The rate of job creation came to a near-standstill, while input buying was cut back sharply – hitting demand at suppliers. Business optimism sank to a 28-month low as companies noted that the horizon was darkening amid concerns about recession and the impact of the cost of living crisis.
“There was better news on prices, however. Although still elevated, rates of input cost and selling price inflation both eased sharply, which could take some considerable pressure off consumer price inflation in the coming months, albeit with energy prices remaining a key concern and area of great uncertainty as we head into the autumn.”