UK factories facing a prolonged slump could be starting to turn a corner as the manufacturing downturn eased further in November, according to a closely-watched survey.
But there is “little festive cheer” for firms which continue to grapple with tougher economic conditions.
The S&P Global/CIPS UK manufacturing PMI survey rose from 44.8 in October to 47.2 in November, the highest reading since April.
It comes after Chancellor Jeremy Hunt, last month, announced a multibillion-pound funding package for key manufacturing sectors as part of efforts drive growth and boost investment in the UK.
Carmakers, aerospace companies and clean energy firms are set to benefit from a £4.5 billion Government fund earmarked for “strategic” manufacturing sectors, under the Government’s Advanced Manufacturing Plan.
Nevertheless, November’s PMI remains below a score of 50, which indicates that the sector is shrinking.
It also marks the 16th month in a row that activity has declined, with production continuing to face the longest period of decline since the global financial crisis between 2008 and 2009.
Factories have scaled back production because there is less demand for goods, fewer exports, and retailers running down their inventories, the survey found.
Firms have also faced strong competition from overseas markets including mainland China, Europe and the US, further weakening sales.
Rob Dobson, director at S&P Global Market Intelligence, said: “Although the downturn in production eased sharply in November, the latest PMI report brings little festive cheer when the finer details are considered.
“Manufacturers are preparing for tough times ahead, with their continued caution leading to cutbacks in staffing, inventories and purchasing.”
Job losses were reported for the 14th consecutive month in November.
But there was some good news amid the gloom, with costs continuing to fall for businesses.
A wide range of goods were reported as being down in price including chemicals, energy, food products, metals, packaging and plastics.
But manufactures continued to slightly bump up their selling prices as part of efforts to repair margins, the survey found.
Dr John Glen, chief economist at the Chartered Institute of Procurement & Supply (Cips), said: “Crawling upwards towards the no-change mark, the sector displayed some resilience as rates of contraction in output and new orders eased, but overall conditions remain softer than hoped for as we move towards the end of 2023.”
Meanwhile, PwC pointed out that manufacturers will be preparing for colder temperatures sweeping across the UK.
Cara Haffey, manufacturing and automotive lead for PwC UK, said: “With much of the UK experiencing a somewhat sudden cold snap this week, colder temperatures and risks of snow and ice mean that adequate planning for supply chain resilience is vital for manufacturers to have minimal disruption to their operations throughout the winter period.”