Manufacturers cut jobs as sector shrinks for second month in a row

Activity across the Britain's factories declined as companies scaled back production

There was further confirmation of the darkening economic picture yesterday after new figures showed that the manufacturing sector had contracted for its second consecutive month in November, with output declining at its sharpest pace in more than two and a half years.

Activity across the UK's factories declined as companies scaled back production in response to lower demand both from within and outside the country, with the eurozone debt crisis hitting trends. Jobs were also cut, with employment in the sector declining at its fastest rate in more than two years.

The weakness was apparent in the survey of manufacturing purchasing managers' from the data provider Markit and the Chartered Institute of Purchasing and Supply (Cips). It showed that the key purchasing managers' index (PMI) stood at 47.6 last month, down from an upwardly revised figure of 47.8 in October to its lowest level since June 2009. A reading below 50 indicates that the sector is shrinking.

Amid the gloom, there was some relief among economists who had expected weaker than reported trends. That, however, did not mask the grim auguries for the sector, which helped pull the UK out of recession, and the broader economy. Earlier this week, the Organisation for Co-operation and Development warned that the UK was on the bring of a modest recession, while the Office for Budget Responsibility lowered its growth estimate for next year to just 0.7 per cent.

"Export orders, which UK manufacturers are increasingly dependent on, continue to decline as the eurozone crisis impacts demand in UK and Asia as well as Europe," the Cips chief executive, David Noble, said.

"Worryingly, employees are already being affected by the downturn... With new orders and outstanding business falling, it seems likely there will be more job losses to come next year."

Along with staff, factories also cut back on purchasing and stock holdings. The reductions came as incoming new orders fell for the fifth month running in November, even though the rate of decline eased from the record pace seen back in October. New export orders fell amid reduced demand form mainland Europe, the US and Asia, the report showed.

Falling orders meant that the backlogs were lower. "The manufacturing engine has run out of steam," Rob Dobson, senior economist at Markit and the author of the report, said, adding that, as new orders fall, manufactures are relying on previous commissions to avoid cuts in output and jobs. "This cannot go on indefinitely," he warned.

The revelation that average input costs had declined for the first time since July 2009 was positive, however, with economists pointing out that this would help reinforce the Bank of England's view that consumer price inflation will fall back sharply next year.

But decline in activity led to renewed predictions that the Bank was likely announce another round of quantitative easing to support the flagging economy in the new year.

Start your day with The Independent, sign up for daily news emails
A recent rise in net migration has been considered bad news for the Government
voicesYet when we talk about it, the national media goes into a frenzy, says Nigel Farage
Life and Style
Miracle muffin: chemicals can keep a muffin looking good at least a month after it was bought
food + drinkThe alarming truth behind the chocolate muffin that won't decay
Arts and Entertainment
Jonny Evans and Papiss Cisse come together
Approved Food sell products past their sell-by dates at discounted prices
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Evening Administrator

£8 per hour: Recruitment Genius: This Pension Specialist was established early...

Guru Careers: Executive Assistant / PA

£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Day In a Page

Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

Homeless Veterans campaign

Donations hit record-breaking £1m target after huge gift from Lloyds Bank
Flight MH370 a year on: Lost without a trace – but the search goes on

Lost without a trace

But, a year on, the search continues for Flight MH370
Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

Germany's spy HQ springs a leak

Thieves break into new €1.5bn complex... to steal taps
International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

Whirlwind wit of Simone de Beauvoir

Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
Russia's gulag museum 'makes no mention' of Stalin's atrocities

Russia's gulag museum

Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

The big fresh food con

Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

Virginia Ironside was my landlady

Tim Willis reveals what it's like to live with an agony aunt on call 24/7
8 best workout DVDs

8 best workout DVDs

If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
The Internet of Things: Meet the British salesman who gave real-world items a virtual life

Setting in motion the Internet of Things

British salesman Kevin Ashton gave real-world items a virtual life
Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

Election 2015: A dead heat between Mr Bean and Dick Dastardly!

Lord Ashcroft reveals latest polling – and which character voters associate with each leader
Audiences queue up for 'true stories told live' as cult competition The Moth goes global

Cult competition The Moth goes global

The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

Pakistani women come out fighting

Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers