UK December final manufacturing PMI 47.0 vs 47.3 prelim

• Prior 48.0

The slight revision lower marks an 11-month low for the headline reading. That comes as the rates of contraction for output, new orders, and employment all gathered pace in December. While the UK economy does rely more on services, this still isn’t a good sign as the plague from Europe starts to spread to the UK. S&P Global notes that:

“A stalling domestic economy, weak export sales
and concerns about future cost increases led to the
steepest contraction of UK manufacturing production
for almost a year in December.

“Manufacturers are facing an increasingly downbeat
backdrop. Business sentiment is now at its lowest
for two years, as the new Government’s rhetoric and
announced policy changes dampen confidence and raise
costs at UK factories and their clients alike. SMEs are
being especially hard hit during the latest downturn.

“This is sending a winter chill through the labour
market. December saw the sharpest cuts to staffing
levels since February. Some companies are acting now
to restructure operations in advance of the rises in
employer National Insurance and minimum wage levels
in 2025. Global market conditions are also providing a
growing headwind, with export sales hit by lower demand
from Europe, Asia and the US.

“The survey price gauges edged higher, reflecting rising
transportation, labour and material costs, in some cases
due to supply chain stresses pushing up global market
prices. With costs expected to rise again in early-2025
as the announced Budget changes come into actual
effect, the Bank of England is likely to remain cautious
about further interest rate cuts despite rising signs of
economic difficulties.”

This article was written by Justin Low at www.forexlive.com.