British Manufacturing Faces Sharpest Contraction Amid Rising Costs

The British manufacturing sector is experiencing its sharpest contraction in nine months due to falling domestic and foreign orders and increased supply chain disruptions. The S&P Global manufacturing PMI dropped to 48.0, influenced by rising employment taxes, minimum wage, and global trade uncertainties.

The British manufacturing sector is on a steep decline, facing its sharpest contraction in nine months as detailed in a report released on Monday. Domestic and international orders have plummeted, exacerbated by ongoing supply chain issues, leading to increased costs.

The S&P Global manufacturing Purchasing Managers' Index (PMI) fell to 48.0 in November from October's 49.9, marking a significant downturn from the anticipated 48.6 and beneath the growth-contraction threshold of 50. S&P attributes this to the new Labour government's budget imposing a £25 billion rise in employment taxes and a 7% minimum wage hike, coupled with shipping disruptions in the Red Sea and looming global tariffs.

Rob Dobson, director at S&P, highlighted the prevailing challenges manufacturers face, with small companies particularly impacted. Orders, output, and employment have all experienced their fastest decline in nine months, contributing to the hesitancy in investment projects amid broader global uncertainties.

(With inputs from agencies.)