Index reveals further decline in the UK manufacturing industry

The UK manufacturing sector saw overall operating conditions deteriorate for the sixth successive month in October. Companies continued to face declining export sales, weaker domestic demand and rising cost pressures.

At 47.5 in October, from a revised figure of 48.1 in September, the seasonally adjusted Markit/CIPS Purchasing Manager’s Index (PMI) fell for the second successive month and to its lowest level since July this year.

The latest reading was broadly in line with the average for the third quarter of 2012 as a whole.

Production volumes were scaled back for the fourth straight month in October, with the rate of decline the second sharpest during the past three-and-a-half years.

The main factor underlying lower output was a further reduction in new work received. Total new orders fell for the seventh month running and at a faster pace than in September.

Manufacturers linked lower levels of new business to reduced inflows of new export orders and weaker domestic demand. New export business declined at the second-fastest pace in just more than a year, mainly owing to the continuing economic weakness seen in mainland Europe. There were also some reports of lower demand from clients in Asia.

There were, however, some brighter areas in the UK manufacturing sector in October. Although conditions deteriorated in the intermediate and investment-goods sectors, output in the consumer-goods sector bounced back strongly from September’s contraction. Consumer-goods producers also saw improved demand from both domestic and overseas clients.