‘Anaemic’ manufacturing and ‘astonishing’ job cuts
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“Anaemic”, was how one analyst described the manufacturing sector’s opening performance in 2009, as the latest monthly Chartered Institute of Purchasing and Supply (CIPS) index gained modest ground but remained close to November’s record low.
Data published this morning (2 February) from the Institute’s purchasing managers’ index showed the UK manufacturing sector started 2009 on a weak footing with output, new orders and employment continuing to drop substantially. Most noticeably, the performance of suppliers to the beleaguered automotive and construction sectors deteriorated most markedly.
The headline Purchasing Managers’ Index (PMI), in which scores above the neutral mark of 50 indicate positivity, posted a reading of 35.8 in January – marginally higher than the 34.9 posted for December and moving in the right direction despite being the third-weakest in the 17-year survey history.
New orders fell with domestic conditions being especially weak – largely as a result of the crises in the automotive, construction, housing and retail sectors. The economic difficulties being experienced by most of the UK’s major trading partners meant exporters were unable to benefit from a lower sterling exchange rate.
Manufacturers reported further job losses in January, with the rate of reduction in staffing levels hitting a new survey record and the sharpest cuts in employment generally centred on larger-sized enterprises.
CIPS director of professional practice Roy Ayliffe (pictured) said: “Purchasing managers in the UK manufacturing sector reported an anaemic opening to 2009 with record falls in employment as factory jobs were cut at an astonishing rate of 30,000 per month.
“While the weaker sterling exchange rate acted as a precarious crutch to prop up new export orders in January, benefits were far offset by the downturn in global demand. On the home front, manufacturers continued to wrestle with floundering domestic demand as nearly three fifths of firms reported a decline in new orders.
Unsurprisingly, the intermediate goods sector, which supplies to the ailing automotive and construction industries, was worst hit.”
Rob Dobson, senior economist at Markit Economics said the figures highlighted appalling market conditions.
