The UK manufacturing Purchasing Managers’ Index (PMI) decreased to 47.5 in December from 48.9 in the prior month, as employment, new orders, output, and raw materials purchases declined sharply.
According to a survey published by IHS Markit/CIPS on Jan 2, December’s PMI marks the eighth straight month of manufacturing activity remaining below 50. The low PMI indicates a deteriorating operating environment and sectoral contractions. More pertinently, the marked and prolonged declines in domestic manufacturing activity has no doubt reduced the generation and flow of prompt and prime ferrous scrap grades to processing yards for sale to local smelters and foundries.
Davis Index believes that British manufacturing output dropped at its fastest pace in seven years as many producers drew down on inventories they had built up in the event of a no-deal Brexit. This resulted in significantly lower capacity utilization.
The manufacturing PMI may also reflect high political uncertainty among participants as most of the responses were gathered before the UK’s general election on Dec 12, with surveys conducted between Dec 5 and 18.