Britain’s manufacturing sector was on the verge of a deep recession in October after businesses suffered their worst drop in production and new orders since the start of the pandemic.

Factory output has been hit particularly hard by a drop in new orders amid falling global demand for industrial goods.

The S&P Global/CIPS UK manufacturing PMI, a measure of activity across the sector, scored 46.2 in October, down from 48.4 in September to hit a 29-month low. A number below 50 signals that the sector is contracting.

A component of the index that tracks domestic and export orders dipped to 39.9 from 44.8 to mark its lowest level since the 2009 financial crisis, not counting lows reached during the pandemic.

Fhaheen Khan, chief economist at manufacturing lobby group Make UK, said the Chancellor, Jeremy Hunt, will set a budget in a fortnight, knowing factory output is shrinking and a deep recession in manufacturing is almost certain.

“As the economy tries to regain its bearings after months of political crisis, the manufacturing sector may already be in recession with rapidly declining demand,” he said.

“Until recently, the consumer’s willingness to spend on goods and services was the last saving grace ensuring the industry’s persistence in tough times, despite record levels of inflation.

“Clearly there is a limit to how long this can last with a downturn indicating further decline and a deep recession next year looking more likely by the day,” he added.

Gabriella Dickens, Senior UK Economist at Pantheon Macroeconomics, said: “Looking ahead, demand for industrial goods is expected to fall further as real incomes continue to be hit by above-target inflation, reduced government support for energy bills in April, austerity measures and rising unemployment.

Turkey, one of the world’s biggest manufacturing hubs, reported lower output on Tuesday, as did China, South Korea and Germany.

Japanese factory owners reported activity grew at its slowest pace in 21 months in October after sharp declines in output and overall new orders.

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