UK manufacturing on the brink facing ‘high costs and weak demand’ after budget

A downturn in the UK’s manufacturing sector worsened last month, with activity falling to a nine-month low, amid concerns about the economic outlook and geopolitical tensions, according to new data.

The closely watched S&P Global UK manufacturing PMI survey recorded a reading of 48.0 in November, down from 49.9 in October.

It marks the second consecutive month the score has come below the neutral 50 mark.

Any reading above 50 indicates that activity is growing, while any score below means it is contracting.

Rob Dobson, director at S&P Global Market Intelligence, said: “Conditions in the UK manufacturing sector deteriorated again in November.

“The headline PMI fell to a nine-month low as concerns surrounding the economic outlook, high costs and weak demand led to lower output, falling orders and cutbacks to purchasing, jobs and inventory holdings.”

According to the analyst, the export climate also remained “bleak” as weaker demand from the US, China and EU led to a further drop in new export business.

Companies of all sizes are experiencing a downturn, however, the report shows small companies are the hardest hit, reporting especially marked drops in output, new orders and new export business.

Mr Dobson added: “With recent Budget announcements on labour costs and employer national insurance likely to raise costs further in 2025, and geopolitical tensions heating up notably around the threat of increased global protectionism, manufacturers are left facing an environment of high costs, low demand and raised uncertainty for the foreseeable future.”

Commenting on the data, Julian Jessop, economics fellow at free-market think tank the Institute of Economic Affairs, wrote on X: “More disappointing UK data.

“Weakness in UK manufacturing is partly due to the fallout from the Budget, but also global supply and demand problems which are hitting the rest of Europe too. Indeed, the euro area average was only 45.2, with France 43.1 and Germany just 43.0.”