by Xinhua writer Zhang Yadong

LONDON, Sept. 3 (Xinhua) -- British manufacturing sector slid back into decline in August after three months of modest improvement, as companies struggled with the twin pressures of higher costs and faltering demand.

Data published by S&P Global showed the manufacturing purchasing managers' index (PMI) fell to 47 in August from 48 in July, signaling the sector's 11th straight month of contraction. Rob Dobson, director at S&P Global Market Intelligence, said demand both at home and overseas was falling at the fastest pace in nearly two years.

The Confederation of British Industry (CBI) reported that total orders in August were weaker than in July and well below the long-term average. Export demand also fell more sharply than the previous month. The confederation's survey of 311 manufacturers found that output dropped across 14 of 17 subsectors over the past three months, with chemicals, paper, printing and metals hit hardest.

At the same time, input costs continued to climb. Rising minimum wages and higher employer National Insurance contributions pushed the input cost index to 57.7 in August from 57.0 in July.

"Manufacturers are having to absorb extra costs rather than raise prices," said Mike Thornton, head of industrials at RSM, an audit firm. "Combined with higher energy and labor costs, profit margins are being squeezed."

With shrinking margins and weak demand, many manufacturers are scaling back production.

The auto industry reflects these challenges. Domestic car sales fell 14 percent year on year in July, while exports declined 9.9 percent, according to the Society of Motor Manufacturers and Traders.

The society's chief executive Mike Hawes said that weak consumer confidence and global trade disruptions were keeping the industry unstable, despite a slight month-on-month rise in production.

Exports to the United States have also slumped. The Office for National Statistics reported that British goods exports to the United States fell by 700 million pounds (936 million U.S. dollars) in June, down 14.5 percent from the previous month -- the sharpest decline since February 2022.

Cost pressures are unlikely to ease soon. Tax hikes last year added to business costs but did little to improve government finances, which remain under strain amid rising public spending. Manufacturers now fear additional tax burdens in the upcoming autumn budget.

Analysts expect British manufacturing to remain stuck in contraction in the near future. "Weak demand, trade frictions and heightened policy uncertainty continue to challenge manufacturers," said CBI chief economist Ben Jones.

"The autumn budget will be crucial for restoring business confidence. The government must provide certainty on corporate tax, accelerate industrial and infrastructure strategies, and expand support to tackle uncompetitive energy prices." ■