Source: Sharecast
The S&P Global manufacturing purchasing managers’ index fell to 51.0 from 51.7 in February, coming in below the flash estimate of 51.4. Still, it remained above the neutral 50.0 mark that separates contraction from expansion for the fifth month in a row.
The survey showed that the outbreak of war in the Middle East and closure of the strait of Hormuz had a big impact on supply chains and purchasing costs. Average vendor delivery times lengthened to the greatest extent in over four and a half years, with a quarter of panellists reporting an increase in lead times compared to only 2% reporting a decline.
A number of firms said recent events were exacerbating existing strains on supply chains, for example the Red Sea crisis and post disruptions.
Average input costs rose at the quickest pace since October 2022, as the price of energy, oil, gas and other associated costs spiked.
The seasonally-adjusted input prices index rose 15 points on the month. This was the second-steepest increase since the survey began in January 1992, beaten only by October 1992, following the UK’s withdrawal from the European Exchange Rate Mechanism.
Rob Dobson, director at S&P Global Market Intelligence, said: "UK manufacturing output contracted for the first time in six months in March, as the war in the Middle East and ongoing concerns about domestic economic policy led to a scaling back of production.
"The darker economic and geopolitical backdrop is also weighing on business confidence and hiring trends. Optimism about the year ahead has slumped to a six-month low and the latest round of job cuts is the deepest since last September.
"The one possible positive is that, despite rising at a slower rate, the trend in new order inflows held up better than production. This suggests that the drop in production is currently more of a supply issue than one caused by an outright downturn in demand, though it’s hard to see how demand can prove resilient in the face of current high energy prices and economic uncertainty unless there’s a swift resolution to the war in the Middle East."
