UK factories struggle in February as job cuts accelerate, PMI shows

FILE PHOTO: Production at car manufacturer Nissan, in Sunderland, Britain, November 24, 2023. Ian Forsyth/Pool via REUTERS/File Photo

LONDON (Reuters) – British manufacturers marked a year of falling output in February as factories shed workers at the fastest rate since the onset of the COVID-19 pandemic, a survey showed on Friday.

While the S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) rose last month to 47.5 from 47.0 in January – revised up from a preliminary reading of 47.1 – it has been stuck below the 50 threshold for growth since August 2022.

The survey’s gauge of output, while improving in February, signalled a 12th successive monthly downturn.

The weakness in British manufacturing – mirrored in other major European economies, especially Germany – contrasts with the much larger services sector which has shown signs of recovery since Britain fell into recession late last year.

Most business surveys have pointed to a brighter start for companies in 2024, although high inflation and depleted consumer spending power are likely to limit economic growth – a tricky backdrop for finance minister Jeremy Hunt ahead of his annual budget on Wednesday.

The manufacturing PMI’s employment index sank to its lowest level since June 2020. Excluding the COVID-19 pandemic, it was the worst reading since June 2009, after the global financial crisis hammered Britain’s economy.

Input costs and selling prices grew modestly in February, with the latter index hitting a five-month high – something that might concern some Bank of England officials who are keeping a close eye on inflation pressures.

(Reporting by Andy Bruce; editing Suban Abdulla and Susan Fenton)