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Highlights:
- The UK's manufacturing sector witnessed a dip for the first time in 27 months.
- New orders for UK factories from domestic and foreign buyers plummeted amid inflationary pressures.
People around the globe are taking measures to counter rising inflation and the cost-of-living crises. While discretionary spending sees an obvious reduction during such times, many are slashing spending on essentials as their wages have not increased in line with inflation. As a result, several businesses are witnessing a slowdown in demand.
A new study has suggested that the manufacturing sector in the UK has been hit by rising prices, leading to a decline in production at UK factories. This is the first time since the early months of the COVID-19 pandemic that production has fallen.
For the first time since May 2020, the Purchasing Managers' Index (PMI) of the UK's manufacturing sector slipped below 50. At 47.3, the PMI indicated that the industry had witnessed a contraction in 27 months.
Image source: © Wisconsinart | Megapixl.com
A PMI value above 50 indicates growth, while a value below shows contraction. In July, the PMI stood at 52.1.
The primary reason behind this is the inflationary pressures households and businesses have been facing. With inflation already touching 10.1%, the Bank of England has warned that the economy may slip into recession later this year. As a result, new orders for UK factories from domestic and foreign buyers have plummeted.
In the wake of this news, let us check out some FTSE-listed manufacturing stocks and see how they have been faring.
Imperial Brands plc (LON: IMB)
Imperial Brands, a British tobacco company, holds a market cap of £18,024.49 million, shares of the firm have given a return of 23.06% to investors over the past 12 months. The year-to-date return is 17.13%, while the EPS is 3.00. Shares of Imperial Brands traded at GBX 1,897.00, marginally up 0.03% as of 11:52 am GMT+1 on 1 September.
Croda International Plc (LON: CRDA)
Croda International is a British speciality chemicals maker. With a market cap of £9,391.88 million, the FTSE 100 constituent has provided a negative return of -28.16% to investors in the past 12 months. The earnings per share stood at 2.30. The stock was trading at GBX 6,572.00, down 2.29% as of 12:03 pm GMT+1 on Thursday.
Premier Foods Plc (LON: PFD)
Premier Foods is a British food manufacturing business with a market cap of £928.87 million, and the stock has depreciated over 12% over the past 12 months. The EPS stands at 0.13. Shares of the FTSE 250-listed company were down 1.67% at GBX 105.80 as of 11:59 am GMT+1 on Thursday.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
