The manufacturing PMI continued to indicate falling activity in November. The headline index fell slightly to 47.6 (consensus/BarCap: 47.0) from an upwardly revised 47.8 previously. The output sub-index fell by 0.9 points to 47.2, the lowest reading since April 2009.

The new orders sub-index improved slightly, rising by 1.1 points to 46.0, while the measure for export new orders rose by two points to 49.0. Despite the small increase in the sub-index reported this month, companies continued to report falls in both domestic and foreign orders. The decline in new orders was mainly as a result of the global economic slowdown and rising financial market uncertainty.
 
The employment sub-index dropped to 46.2 from 49.6, indicating the fastest pace of job losses in the sector since October 2009. Falling production requirements, restructuring and non-replacement of leavers led to the fall in staffing levels.
 
The November data delivered some goods news in terms of easing price pressures. The index for input prices fell by 2.8 points to 49.3 and is now consistent with falling input prices for the first time since July 2009. Competition between suppliers as well as the worsening in the economic outlook led to the fall in input costs. The output price sub-index fell by 0.7 points to 51.3, below its long-run average of 53.2 as easing input costs pressures and weaker demand are feeding through to factory gate prices.  
 
The manufacturing PMI has seen a sharp deterioration since the summer with the index being below the 50 points mark for four of the past five months. If the index remains at current levels next month, it will be consistent with a significant fall in output in Q4, after having reported only small increases in the previous two quarters. This would be consistent with our forecast for manufacturing to fall by 0.5% q/q in Q4, driven by slowing demand both at home and abroad.
 

source: BarCap