April saw output and new orders contract, with companies reporting that client destocking and efforts to cut costs had contributed to the downshift in demand, the Index found.
The PMI ticked down to a three-month low of 47.8 in April, from 47.9 in March but above the earlier flash estimate of 46.6. All five of the PMI components signalled a deterioration in operating conditions.
Output, new orders, employment and stocks of purchases all contracted and vendor lead times improved (a sign of weaker demand for inputs hurting suppliers).
Manufacturing production fell for the second month in a row during April. That said, the rate of contraction remained mild and was slightly less marked than in the prior survey month. Output rose in the investment goods sector, but fell at consumer and intermediate goods producers.
Companies reported that output was scaled back due to reduced intakes of new work from both domestic and overseas clients. Total new order inflows decreased at the quickest pace in three months in April, after rising for the first time in almost a year during March. T
There was mention of increased client uncertainty, customer destocking and efforts to control costs all contributing to the drop in new work placed. Softer demand from the US, China and mainland Europe meanwhile led to a decrease in new business from overseas. New export orders contracted for the fifteenth consecutive month, with the rate of decline gathering momentum.
Data broken down by sector provided a more varied picture, however. Consumer and intermediate goods producers saw further declines in new export work, whereas the investment goods sector saw growth hit a 20-month high. April saw further job losses at UK manufacturers.
Employment fell for the seventh month in a row, albeit at the weakest pace during that sequence. The reduction to headcounts was focussed on medium- and large-sized companies. In contrast, small-scale producers raised employment for the fourth successive month.
Although current conditions remained subdued, manufacturers maintained a positive outlook in April. Optimism rose to a 14-month high, with over 61% of companies reporting that they expect output to rise during the coming year. Positive sentiment reflected investment spending, new product launches, forecasts of improved market conditions and organic growth plans.
There was also positive new for manufacturers on the price and supply fronts. Rates of increase in average input costs and output charges both eased in April, falling to 35- and 28-month lows respectively.
Companies linked slower cost increases to reduced supply chain pressure, improved material availability, declining shipping rates and weaker demand for inputs. Vendor delivery times shortened for the third successive month in April, in a further sign of supply chain pressures easing following the severe disruptions experienced over much of the prior three years.
There was mention of improved material availability, better stock levels at suppliers and signs of vendors working through backlogs and bottlenecks. Reduced demand for raw materials also contributed to the shortening of delivery times. April saw input buying volumes at UK manufacturers decline for the tenth month running.
Purchasing activity was cut back in response to lower production requirements and efforts to trim excess stock holdings. Inventories of both inputs and finished goods fell during the latest survey month.
Commenting on the PMI, Maddie Walker, Industry X lead at Accenture, UK, said: “These results are a reminder that it is going to be a rocky road to recovery for the UK’s manufacturing sector. However, it’s positive to see an optimistic outlook remaining amongst companies, with widespread expectation that output will rise during the coming year.
"It’s also encouraging to see cost increases starting to slow as well as delivery times shortening, in a sign that some of the supply chain issues that have defined the sector for the past few years are starting to ease. Continued investment into supply chain resilience, digitisation and modernising the workforce will help stabilise manufacturers and position the sector well for a return to growth once demand improves.”
