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(Sharecast News) - Output in the UK manufacturing sector shrank in March, with new orders declining at the fastest pace in 19 months and business confidence slumping to a near two-and-a-half year low, according to a survey released on Tuesday.
The S&P Global manufacturing purchasing managers' index fell to a 17-month low of 44.9 from 46.9 in February as rising costs and tariff threats took their toll. Still, it was a touch above the flash estimate of 44.6.
Manufacturing production declined for the fifth month in a row and at the quickest pace since October 2023.
The survey showed that the downturn was widespread, with contractions across all sub-sector definitions - consumer, intermediate and investment goods - and all size categories.
New order intakes fell to the greatest extent since August 2023 and at one of the quickest rates since the pandemic and lockdown-affected months of 2020.
Manufacturers reported a tough trading environment, pointing to rising geopolitical tensions, weak client confidence and economic slowdown in both domestic and overseas markets.
Rob Dobson, director at S&P Global Market Intelligence, said: "Companies are being hit on several fronts. Many reported that domestic market conditions are deteriorating, costs are rising due to changes in the national minimum wage and national insurance contributions, geopolitical tensions are intensifying, and global trade faces potential disruptions from tariffs.
"Although the impact on production volumes was widespread across industry, it was again small manufacturers that took the hardest knock.
"The outlook is also darkening, with overall business optimism plunging to its lowest levels since late-2022. Fears about current and future performance put manufacturers on an increasingly cost cautious footing, with employment, stock holdings and purchasing all falling as companies looked to work leaner and protect cash flow, margins and competitiveness. Many firms are clearly hunkering down as they expect difficulties to continue in the coming months."
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