In October 2024, S&P Global’s UK Manufacturing Purchasing Managers’ Index (PMI) indicated a slight decline, dipping below 50 for the first time in six months. The PMI posted a figure of 49.9, down from September’s 51.5 and an earlier flash estimate of 50.3. Several factors contributed to this decline, including a drop in new work intake, supply chain challenges, and uncertainty surrounding the anticipated Labour Government Budget announcement.
Despite the dip, industry leaders are hopeful that recent government announcements will encourage future optimism. Mike Thornton, RSM UK’s national head of manufacturing, expressed optimism regarding the recently introduced Industrial Strategy green paper and last week’s Budget, which he described as “welcome news for the sector.” He highlighted the importance of investment to fuel growth and address productivity challenges, suggesting that the sector’s resilience over the past six months positions it for positive momentum heading into the end of the year.
Findings from RSM UK’s Investment Monitor survey, conducted with Make UK, revealed that manufacturers are particularly interested in reductions to corporate tax and expanded capital allowances. Although some of these demands may be difficult to fulfil in the current fiscal environment, Thornton noted the government’s dedication to capital allowances and research and development (R&D) investment. He also welcomed the Budget’s allocation of £1 billion for aerospace and £2 billion for automotive, supporting advanced manufacturing in the UK.
RSM UK economist Tom Pugh echoed these sentiments, noting that the “pre-Budget nerves” were likely a factor in the PMI’s performance. While certain indices, including output and new orders, showed declines, Pugh pointed out positive indicators, such as an uptick in employment confidence and a significant reduction in input prices due to stabilised energy costs. These signs of resilience, combined with government measures to support the sector, suggest that manufacturing may see an upwards trend as the year concludes.
While challenges remain, the sector’s outlook appears cautiously optimistic, buoyed by targeted government support and strategic investment opportunities.
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