Although the outlook for the sector remained positive overall, with 55% of companies expecting growth over the coming 12 months, the level of optimism dipped slightly over the month.
The PMI posted 44.3 in September, up slightly from August's 39-month low of 43.0, but still among the weakest readings seen over the past 14 years. All five of the sub-indices comprising the PMI (new orders, output, employment, stocks of purchases and supplier delivery times) were consistent with a weakening of underlying sector performance.
September saw manufacturing output decline for the seventh successive month, as companies cut back production in response to lower order intakes. Demand was impacted negatively by ongoing market uncertainty, the cost-of-living crisis and weak conditions in overseas markets.
New export business contracted for the twentieth successive month in September, with reports of lower demand from within Europe, the US, mainland China and Brazil. The biggest drains on export market conditions were client uncertainty and the subdued global economic situation. That said, the rate of decrease in overseas demand was noticeably slower than in the prior survey month.
Data broken down by sector indicated that intermediate goods remained the weakest performing category, seeing the steepest decreases in both output and new business. That said, consumer and investment goods producers fared only moderately better, with both seeing contractions over the month.
The ongoing downturns in output and new orders continued to negatively influence the trends in employment, input purchasing and stock holdings. These mainly reflected concerns about future production requirements, cost considerations and efforts to protect margins and improve cash flow.
September saw manufacturing employment reduced for the twelfth consecutive month and the rate of decline was the second-steepest during that sequence. Job losses were registered across the consumer, intermediate and investment goods industries and at small, medium and large-scale producers. That said, weaker intakes of new work meant that available spare capacity built at factories.
Backlogs of work contracted for the seventeenth straight month and at the quickest pace since April 2020. Purchasing activity was reduced for the fifteenth month running in September, with the rate of contraction close to August's 39-month month high.
Weaker demand for raw materials contributed to a further depletion of stocks of purchases, the twelfth in as many months. Stocks of finished goods were also lowered, albeit to a lesser extent than input inventories.
Average supplier delivery times improved for the eighth successive month in September, as supply chains continued to repair following the stresses of recent years. Lower demand for raw materials also contributed.
Weaker demand for raw materials led to a further decrease in input costs during September. The rate of decline remained close to August's 91-month record. There were a wide range of inputs reported as down in price, including energy and metals. Average selling prices, in contrast, rose for the first time in four months.
Maddie Walker, Industry X lead for Accenture in the UK, said: “Following the consecutive downturns we have seen in recent months, and the UK teetering on the edge of a recession, it is unsurprising to see that the manufacturing sector remains weak.
"Despite the halt in rising interest rates for the first time in almost two years and input costs starting to decrease, low consumer demand and market uncertainty are keeping new orders low. News this month that the UK has overtaken France to become the eighth largest manufacturing economy in the world will come as little reassurance if manufacturers feel this position cannot be maintained.
“Despite the challenging macroeconomic environment, many firms are, however, forecasting growth in the coming year. To match such optimism with practical action, manufacturing businesses should focus on streamlining supply chains, adopting digital technologies and investing in workforce skills for the future.”
