Little change to the initial estimate as it reaffirms UK manufacturing activity falling to a 25-month low. Of note, output contracted for the first time in over two years, reflecting downturns in the consumer and intermediate goods sub-industries. Meanwhile, business optimism was unchanged from June's two-year low in July. S&P Global notes that:
“The UK manufacturing sector shifted into reverse gear at the start of the third quarter. Output contracted for the first time since May 2020, as new order intakes suffered the first back-to-back monthly decreases for two years. Rising market uncertainty, the cost of living crisis, war in Ukraine, ongoing supply issues and inflationary pressures are all hitting demand for goods at the same time, while lingering post-Brexit issues and the darkening global economic backdrop are hampering exports.
"With the Bank of England implementing further interest rate hikes to combat inflation, the outlook is beset with downside risks. With this in mind, the continued low degree of optimism among manufacturers is of little surprise.
“It wasn't all bad news though, with further signs that cost inflation at manufacturers and supply pressures are already passed their respective peaks. Accelerated job growth as companies address staff shortages was also a plus, although may be at risk if the downturn becomes more entrenched over the coming months.”
