UK Manufacturing Faces Persistent Downturn as January PMI Indicates Further Contraction

by Anna

The UK manufacturing sector continues to grapple with challenging conditions as the latest seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) reveals a sustained downturn at the outset of 2024. January witnessed a decline in output, new orders, and employment, with additional challenges arising from supply chain difficulties linked to the Red Sea crisis.

Key Points from the January PMI:


The PMI posted 47.0, a slight improvement from December’s 46.2 but below the earlier flash estimate of 47.3.
The sector has experienced deteriorating operating conditions for the past 18 months, reflecting a persistent contraction trend.
Four out of five PMI sub-components – output, new orders, employment, and stocks of purchases – indicate contraction.


Manufacturing production decreased for the eleventh consecutive month in January, with the rate of contraction unchanged from December.


Lower output is attributed to weaker new work inflows, efforts to reduce inventory holdings, and disruption caused by supply chain delays.


Geopolitical tensions focused on the Red Sea route to the Suez Canal contributed to rising vendor lead times, affecting inputs ordered from overseas.

Supplier performance deteriorated for the first time in a year, with disruptions in the global trade route leading to higher average input costs.

Input buying volumes fell for the nineteenth successive month, and finished goods inventories decreased at the quickest rate in almost two-and-a-half years.

Despite the current downturn, manufacturers maintain a positive outlook, with business optimism rising to a four-month high.
Concerns persist about weak market conditions and the risk of losing clients due to rising costs.

Expert Insight:
Maddie Walker, Industry X lead for Accenture in the UK, commented on the challenges faced by the UK manufacturing sector. She highlighted the ongoing vicious cycle where sector contraction leads to caution, reduced stocks, and employment cutbacks, hindering growth. The Red Sea conflict and geopolitical events continue to disrupt global supply chains.

Walker emphasized the need for manufacturers to find effective collaboration methods with suppliers and leverage digital technologies to enhance accuracy and streamline processes. She acknowledged that slow international trade and weak domestic demand may persist, urging manufacturers to explore strategies that balance demand responsiveness without compromising growth.

The January PMI underscores the resilience required by the UK manufacturing sector amid complex economic and geopolitical challenges, urging businesses to explore innovative solutions for sustainable growth.

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