The UK manufacturing sector recorded its ninth straight month of expansion in July, though overall momentum decelerated as slower job creation and a "steep" decline in stocks of purchases tempered gains in factory output.
The final S&P Global UK Manufacturing PMI came in at a four-month low of 51.9, below the prior 52.5 and the flash estimate of 52.8, S&P Global said Monday. While rising production prompted some manufacturers to hire, cost-cutting efforts and cautious outlooks dragged overall job growth down to its weakest level in four months.
As average vendor lead times increased at the slowest rate since February, UK factories pulled back on buying activity for the first time since March and saw both raw material and finished product stocks decline for a second straight month.
Concurrently, factory production surged to a near two-year high across consumer, intermediate and investment goods, amid the eighth consecutive month of rising domestic and export orders. However, the expansion was uneven, with growth among medium- and large-sized companies contrasting with a slight decline in production volumes for small-scale manufacturers.
Growth in both input costs and selling prices further cooled as supply chain headwinds and input demand softened. Despite the easing trend, manufacturers reported higher costs across some materials, including food, metals and packaging.
"These positive price and demand trends were not fully reflected in the labour market, with the upturn in manufacturing hirings grinding to a near halt in July, but the first rise in backlogs of work in over four years suggests employment could pick up in the coming months. This would be assisted if business optimism recovers from its current subdued level. Hopefully progress relating to geopolitics, global trade tensions and the direction of the new UK government's industrial and tax policies will aid, and not hinder, this process," S&P Global Market Intelligence Director Rob Dobson said.
