• Prior 45.3

The headline reading is a 39-month low as UK manufacturing activity takes a big hit in August. Factory orders are seen tumbling in the face of higher rates with demand also being hit by weaker domestic and export conditions. S&P Global notes that:

“August saw a further deepening of the UK manufacturing downturn. The PMI sank to a 39-month low as output and new orders contracted at rates rarely seen outside of major periods of economic stress such as the global financial crisis of 2008/09 and the pandemic lockdowns.

"Manufacturers reported a weakening economic backdrop as demand is hit by rising interest rates, the cost-of-living crisis, export losses and concerns about the market outlook. While this is being felt across the manufacturing industry, business-to-business companies are especially hard hit. Intermediate goods producers saw the steepest drops in output, new orders and employment as a result.

“The downturn is also forcing companies into a more defensive posture. Purchasing activity, inventory holdings and staffing levels were all cut back in August as manufacturers strived to control costs, protect margins and operate in a much leaner and efficient manner.

"The 'plus' side of the downturn is that input costs are now falling at the quickest pace since January 2016 and inflationary supply chain issues are abating, which should help feed through to lower goods price inflation in the coming months. The survey data therefore suggest policymakers will become increasingly focused on concerns over the economy's health as they mull the need for further rate hikes.”