Poll indicates sector shrunk as companies continued to eat up the stockpiles they had built up in anticipation of a no-deal Brexit
More people lost their jobs in the UK manufacturing sector in November than any other month for more than seven years, as the industry continued a months-long losing streak.
The pace of job losses hit its steepest level since September 2012, according to new data from the closely watched IHS Markit/CIPS Purchasing Managers’ Index (PMI) survey.
It found that uncertainty around Brexit, attempts to slash costs, and redundancies had all played roles in the process.
“The pace of job losses also hit a seven-year high as firms sought to reduce overheads in the face of falling sales,” said Rob Dobson, director at IHS Markit.
Meanwhile, the sector scored 48.9 in November, lower than its 49.6 score in October. Anything below 50 means the sector is contracting. However, market watchers might take some relief from the fact that it beat preliminary figures of 48.3, released for the first time ever two weeks ago.
The sector was hit as companies continued to eat up the stockpiles they had built up in anticipation of a no-deal Brexit.
Companies had worried they might not be able to get some supplies from Europe if Britain crashed out without a deal. However, now that the Brexit date has been postponed, businesses are using up these supplies, and not buying new products.
This meant that new orders fell for the seventh month in a row, a fact that was exacerbated by global trade worries. The drop in new export orders was one of the steepest in the past seven years.
“A heavy sense of inevitability hung around the sector in November as it continued to suffer the effects of a lethal cocktail of Brexit uncertainty, slowing global growth and an impending general election,” said Duncan Brock, group director at the Chartered Institute of Procurement & Supply.
He added: “Inevitably, where new orders fall, jobs are sure to follow and manufacturing employment fell at its fastest pace since September 2012.
“Firms tried to balance their books by reducing overheads and improving efficiencies quickly, and staff numbers were the casualties.”
Several businesses decided to shut their doors in November, with Mothercare among the highest-profile casualties.
Last week Bonmarche announced it was avoiding collapse after being taken out of administration by Peacocks. But around 240 jobs will still be lost as 30 stores are closed before Christmas.