![\"A](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/09\/1680.jpg\")
Photograph: S&P Global<\/p>\nUK manufacturing downturn continues as new orders and new export business fall<\/p>\n
Ouch! The UK manufacturing sector shrank again last month, as factories were hit by weaker demand at home and abroad.<\/p>\n
The latest monthly poll of purchasing managers across Britain\u2019s manufacturing sector found that new orders and new export business both fell at quicker rates in August, leading to another drop in production volumes.<\/p>\n
This pulled the S&P Global UK Manufacturing Purchasing Managers\u2019 Index down to 47.0 in August, from July\u2019s six-month high of 48.0. It\u2019s the 11th month in a row in which the PMI has come in below the 50-point mark showing stagnation.<\/p>\n
Photograph: S&P Global<\/p>\n
UK factories blamed lower new work inflows to \u201csubdued client confidence\u201d, citing tariff uncertainties, and cost increases due to the rise in the minimum wage and employer national insurance rates.<\/p>\n
Rob Dobson, director at S&P Global Market Intelligence, says:<\/p>\n
\u201cProduction volumes are still showing resilience in the face of global geopolitical uncertainty and US tariff policies, with both July and August having seen only slight contractions that were milder than those suffered earlier in the year. Business confidence has also lifted to a sixmonth high, reflecting hopes that the trading environment is starting to settle down.<\/p>\n
However, August also saw a steep drop in UK manufacturers\u2019 new orders, with total order books and overseas demand both falling at some of the fastest rates seen over the past two years. Weak market conditions, US tariffs and downbeat client confidence all contributed to the dearth of new contract wins. Job cuts were also reported for a tenth successive month, with factory headcounts dropping to one of the greatest extents postpandemic.<\/p>\n
The outlook for the sector therefore clearly remains very uncertain. With manufacturers fearing that possible government policy decisions, including potential tax increases, could further hurt their competitiveness in domestic and export markets, the upcoming Budget will likely prove very important in guiding business confidence about the year ahead.<\/p>\n
Share<\/a><\/p>\n Key events<\/p>\n Show key events only<\/p>\n Please turn on JavaScript to use this feature<\/p>\n Closing post<\/p>\n Time for a recap<\/p>\n Factories in the UK, and across the Asia-Pacific region, have recorded a weak August.<\/p>\n The UK manufacturing sector shrank again last month,new data from S&P Global showed, as factories were hit by weaker demand at home and abroad<\/a>.<\/p>\n The latest monthly poll of purchasing managers across Britain\u2019s manufacturing sector found that new orders and new export business both fell at quicker rates in August, leading to another drop in production volumes.<\/p>\n Export powerhouses Japan, South Korea and Taiwan all saw manufacturing activity shrink in August too<\/a>, with some factories blaming the impact of Donald Trump\u2019s trade wars.<\/p>\n The head of the European Central Bank has warned that Trump\u2019s attack on the US Federal Reserve could be a threat to the world economy.<\/p>\n Christine Lagarde said<\/a>:<\/p>\n \u201cIf U.S. monetary policy were no longer independent and instead dependent on the dictates of this or that person, then I believe that the effect on the balance of the American economy could, as a result of the effects this would have around the world, be very worrying, because it is the largest economy in the world.\u201d<\/p>\n UK government borrowing costs rose near a 27-year high today<\/a>, as investors fretted about the risk of higher debt issuance and persistent inflation.<\/p>\n In the UK housing market, prices fell last month <\/a>as potential buyers were hit by affordability challenges.<\/p>\n But there was also an increase in the number of mortgages approved by lenders<\/a>.<\/p>\n Share<\/a><\/p>\n The early rally in the London stock market has rather fizzled out.<\/p>\n Although defence stocks are still up, following the UK\u2019s \u00a310bn warship deal with Norway, the wider FTSE 100 index is now flat.<\/p>\n Even so, investors have enjoyed a solid rally since the turmoil triggered by Donald Trump\u2019s trade war faded back in the spring.<\/p>\n Tom Stevenson, investment director at Fidelity International, explains:<\/p>\n \u201cBar a September stock market wobble – and history shows they sometimes happen at this time of year – investors will be celebrating a powerful summer rally by the time of next week\u2019s St Leger Day horse race in Doncaster.<\/p>\n \u201cThat\u2019s the second part of the old stock market adage that tells investors to \u2018sell in May and go away, don\u2019t come back \u2018til St Leger\u2019s Day\u2019. It often fails to deliver – unsurprising, given the tendency of markets to rise over time – but it rarely falls over as spectacularly as it has this year.<\/p>\n \u201cSince Donald Trump\u2019s U-turn on tariffs in early April – when he paused levies for 90 days a week after imposing them – shares have soared. The S&P 500 is up from a low of below 5,000 to 6,500 last week. Here, the FTSE 100 has risen from 7,700 to 9,300. While in Japan, the Nikkei is up from 31,000 to 43,000 today.<\/p>\n Share<\/a><\/p>\n In the automobile sector, Tesla is still proving popular in Norway.<\/p>\n While sales in other European countries have wilted this year, Teslas made up more than a fifth of new car sales in Norway in August.<\/p>\n The Norwegian Road Federation has reported that Tesla models were close to 22% of new car sales in August, with electric cars as a whole accounting for 97% of new passenger vehicle registrations.<\/p>\n But other markets are tougher to crack. Data from France today showed that registrations of new Tesla cars fell 47.3% in August versus the same month in 2024.<\/p>\n Tesla registrations fell more than 84% in Sweden – where electric vehicle sales were flat and the market overall was up 6% – and dropped 42% in Denmark.<\/p>\n Share<\/a>UK bond yields rise after Downing Street reshuffle<\/p>\n Britain\u2019s long-term borrowing costs are inching closer to their highest level since 1998 as the City digests a shake-up at Number 10 Downing Street.<\/p>\n The yield, or interest rate, on UK 30-year bonds has risen to 5.64% this morning, the highest since the 27-year high set in April.<\/p>\n Yields measure the cost of borrowing, and this increase threatens to eat into chancellor Rachel Reeves\u2019s fiscal headroom as she draws up the autumn budget.<\/p>\n The reshuffle will see Darren Jones, the chief secretary to the Treasury, move to a new senior role in Downing Street. The former Bank of England deputy governor Minouche Shafik will become Starmer\u2019s chief economic adviser.<\/p>\n The shake-up is meant to improve the delivery of Starmer\u2019s policy goals.<\/p>\n But investos also see it as a signal that the government will issue more debt than previously expected, suggests Simon French of investment bank Panmure Liberum:<\/p>\n Posting on X, French says:<\/p>\n Yield spread between what UK 10Y paper trading at – and max from the rest of the G7 – is now at +50bp. That\u2019s the highest on record and takes out the Spring Statement high. New economic team needs to show No.10 gets this dynamic, and backs their Chancellor.<\/p>\n The immediate market reaction is not exactly a vote of confidence on these moves. Markets seeing it as a signal of more Gilt issuance\/ inflation to come. Yield spread between what UK 10Y paper trading at – and max from the rest of the G7 – is now at +50bp. That’s the highest on\u2026 https:\/\/t.co\/CzQTph0LWB<\/a> pic.twitter.com\/GP1XISqT7U<\/a><\/p>\n \u2014 Simon French (@Frencheconomics) September 1, 2025<\/a><\/p>\n Long-dated eurozone government bond yields have also risen today, as traders anticipate the likely collapse of the French government next week if it loses a confidence vote.<\/p>\n Share<\/a><\/p>\n Updated at\u00a008.01 EDT<\/p>\n Home buyer mortgage approvals rise to six-month high<\/p>\n The number of mortgage approvals made to home buyers jumped to a six-month high in July, according to Bank of England figures.<\/p>\n Some 65,352 mortgage approvals for house purchases were recorded in July, which is the highest total since January when 65,775 home loans were approved.<\/p>\n However, there was also a drop in the value of new mortgages approved in July \u2013 it fell by \u00a3900m to \u00a34.5bn, having jumped to \u00a35.4bn in June.<\/p>\n A chart showing UK mortgage approvals Photograph: Bank of England<\/p>\n The Bank also reports that the \u2018effective\u2019 interest rate on new mortgages decreased for the fifth consecutive month, to 4.28% in July from 4.34% in June. However, the rate on the outstanding stock of mortgages remained at 3.88%.<\/p>\n Share<\/a><\/p>\n Updated at\u00a006.59 EDT<\/p>\n Donald Trump is trying to send a clear message to the Federal Reserve by attempting to fire Lisa Cook, says Enrique Diaz-Alvarez, chief economist at global financial services firm Ebury<\/p>\n \u201cLisa Cook\u2019s attempted firing by Trump is likely to be a long legal process. While the short term impact is limited, the message being sent to other Fed governors is unmistakable.<\/p>\n \u201cLong term rates are the key for Trump, as they drive mortgage rates and hence the housing markets, and these remain stubbornly high even as expectations for rate cuts grow.\u201d<\/p>\n Share<\/a>Lagarde warns Trump\u2019s attack on Federal Reserve is \u2018a serious danger\u2019<\/p>\n The head of the European Central Bank has warned that the global economy could be rocked by Donald Trump\u2019s shake-up of America\u2019s central bank.<\/p>\n Steps by US President Donald Trump to remove Federal Reserve Chairman Jerome Powell or Fed governor Lisa Cook would represent a \u201cvery serious danger for the US economy and the world economy\u201d, said ECB president Christine Lagarde said today.<\/p>\n Lagarde told Radio Classique:<\/p>\n \u201cIf U.S. monetary policy were no longer independent and instead dependent on the dictates of this or that person, then I believe that the effect on the balance of the American economy could, as a result of the effects this would have around the world, be very worrying, because it is the largest economy in the world.\u201d<\/p>\n Last week, lawyers representing Cook accused Trump of using unconfirmed allegations of mortgage fraud as his \u201cweapon of choice\u201d to attack the Federal Reserve<\/a>\u2019s independence, after the president announced he was firing her.<\/p>\n Lagarde also told Radio Classique that a ruling on Friday by a US appeals court that most of Donald Trump\u2019s tariffs were illegal were adding a \u201cfurther layer of uncertainty\u201d to the global economic outlook.<\/p>\n Trump has repeatedly blasted Powell for the Fed\u2019s failure to cut US interest rates this year, and is expected to appoint a successor with a more dovish approach.<\/p>\n Share<\/a><\/p>\n Updated at\u00a006.08 EDT<\/p>\n Eurozone unemployment dips to record low of 6.2%<\/p>\n Unemployment across the eurozone has dropped to its record low this summer.<\/p>\n New data from statistics body Eurostat show that euro area seasonally adjusted unemployment rate dropped to 6.2% in July, down from 6.3% in June 2025 and from 6.4% in July 2024.<\/p>\n Eurostat estimates that there were 13.025m people unemployed in the European Union, including 10.8m in the euro area.<\/p>\n In July, unemployment decreased by 165,000 in the EU and by 170,000 in the euro area.<\/p>\n Analysts at ING say:<\/p>\n Falling unemployment suggests that the eurozone economy remains resilient in the face of global uncertainty.<\/p>\n Modest economic growth seems realistic for the coming quarters, as the strong labour market should aid some domestic recovery<\/p>\n Share<\/a><\/p>\n UK Manufacturing PMI (AUG’25)<\/p>\n Final: 47.0 Key Points: \u2014 Interpretiv (@InterpretivUK) September 1, 2025<\/a><\/p>\n Share<\/a><\/p>\n Manufacturing supply chains also remained stretched in August.<\/p>\n Today\u2019s PMI report flags that the average wait to receive raw materials lengthened last month, due to a combination of shipping delays, vendor capacity issues, transportation re-routing to avoid the Red Sea and global material shortages.<\/p>\n
Previous: 48.0
Consensus (Flash Estimate): 47.3<\/p>\n
\u2022 New orders contract at fastest pace in 4 months and to one of greatest extents seen in 2 years.
\u2022 Another month of job losses, driven by tariff uncertainty and higher NI\/MW\u2026 pic.twitter.com\/JMSspIHY7Q<\/a><\/p>\n