UK manufacturing shrinks at fastest pace in 5 months, PMI shows

By David Milliken

LONDON (Reuters) -British manufacturing activity shrank at the fastest pace in five months in September, reflecting subdued domestic demand and fewer export orders, according to a survey on Wednesday that painted a more downbeat picture than recent official data.

The S&P Global Purchasing Managers' Index for Britain's manufacturing sector fell to 46.2 in September from 47.0 in August, unchanged from a provisional estimate and in line with economists' expectations in a Reuters poll.

The index was the lowest since April and below the 50 level that divides growth from contraction, and its output component dropped to a six-month low of 45.7 from 49.3.

"Manufacturers reported that production had been scaled back in response to weaker intakes of new business, with demand from both domestic and export markets weak," S&P Global said.

By contrast, official data on Tuesday showed manufacturing output grew by 0.2% in the three months to June - only a little less than the wider economy - and was 0.4% higher than a year earlier.

Manufacturing accounts for about 9% of Britain's economy.

S&P said that the PMI data showed manufacturing orders had fallen for the 12th month in a row and to one of the greatest extents in two years, reflecting weak confidence, continued uncertainty over U.S. tariffs and higher energy and staff costs.

Companies also reported disruption from a shutdown at carmaker Jaguar Land Rover following a cyber attack.

Businesses are closely eyeing finance minister Rachel Reeves' annual budget next month, after being hit unexpectedly hard last year with higher social security contributions.

The PMI showed manufacturers continued to cut staff numbers for the 11th month in a row across a wide range of industries, which they linked to higher employment taxes, an increased minimum wage and past rises in energy costs.

In September, input costs and prices charged both rose at the slowest rate in nine months.

(Reporting by David Milliken)