The final UK manufacturing PMI fell to a 14-month low. At 46.9, it is up from the flash estimate of 46.4 but down from January's final of 48.3. This implies contraction in activity for the fifth consecutive month.

As this was the fifth consecutive print below the 50-growth threshold, it reflects declines in output, new orders, employment and client confidence. Production fell for the fourth month in a row. Low demand and weakened consumer confidence led to lower output in February. This was especially prevalent in the consumer goods industry which was worst hit. Investment and intermediate goods also saw decline in February.

The labour market saw the steepest job loss since mid-2020. New business fell alongside the changes to minimum wage legislation and employer national insurance contributions (NICs) announced last year led to firms laying off temporary staff, refusing to replace leavers and retired employees as well as reducing hours of retained staff. This was seen across small, medium and large companies, with large size firms having the steepest employment reduction of the three.

Still, business optimism rose to a 6-month high due to increased investment spending, new products and marketing initiatives.
February saw an uptick in purchase price inflation, this is said to be due to higher minimum wages and employer NICs, material shortages and general price inflationary pressure causing suppliers to increase their prices. Selling prices also rose to the highest since April 2023.

The latest results raise the UK RPI to 53 and the RPI-P to 46. Overall economic activity is slightly outperforming market expectations.

No revision is the call from 46.4 in the flash, and down from 48.3 in January, not a pretty picture.

The Manufacturing Purchasing Managers' Index (PMI) provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector survey incorporating around 3,000 companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The survey covers more than 600 industrial companies and is compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM manufacturing index in the U.S. and the and S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.