UK manufacturing continued to grow steadily in September, with output and new orders both increasing. The domestic market remained the key driver behind this expansion. However, there were signs of caution among decision-makers, with the upcoming Autumn Statement leading to slower gains in production and new business. This uncertainty also resulted in future expectations falling to their lowest level in nine months.
The S&P Global UK Manufacturing Purchasing Managers’ Index™ (PMI®) for September recorded a figure of 51.5, slightly down from August’s 52.5 but consistent with earlier estimates. The index has remained above the neutral 50.0 threshold for five consecutive months, indicating ongoing expansion within the sector.
Among the sub-sectors, three out of five key components – output, new orders, and supplier delivery times – showed improvements, reflecting healthier manufacturing conditions. In contrast, employment levels and purchase stocks dropped as manufacturers cut back on costs in response to rising input prices.
Manufacturing output rose for the fifth month in a row in September, driven by increased demand in the consumer and intermediate goods sectors. These sectors both reported stronger growth in output and new orders. On the other hand, the investment goods sector, which had previously performed well, saw a contraction in production and new work for the first time in five months.
There was a continued decline in new export orders, marking the thirty-second month of contraction. UK manufacturers attributed this mainly to weak market conditions in Europe, particularly in France and Germany, as well as lower demand from the United States.
Rising uncertainty among manufacturers and their clients began to impact key variables, including new orders, output, and future confidence levels. There was a noticeable drop in business optimism, reaching a nine-month low in September. The fall in the Future Output Index (7.5 points) was the second sharpest on record, surpassed only by the decline during March 2020’s pandemic-related disruptions.
Some manufacturers expressed concerns about potential changes in government policy, particularly around October’s Autumn Budget, while global market conditions also weighed on outlooks. Despite this, half of those surveyed still expect production to rise in the coming year, with new projects, marketing efforts, and planned product launches contributing to cautious optimism.
Manufacturing employment declined in September, after two months of growth, as companies took a more cautious approach due to the uncertain demand outlook. Cost-cutting measures also led to reductions in purchasing activity and stock levels.
In September, input prices rose at their fastest rate since January 2023, with many materials seeing price hikes due to increased freight costs. Supply chains were also re-routed away from the Red Sea, extending lead times for the ninth consecutive month. These cost increases were passed on to some customers through higher selling prices.
Rob Dobson, Director at S&P Global Market Intelligence, commented that although UK manufacturing is expanding, the pace of growth has slightly slowed. The domestic market remains strong, but future prospects appear more uncertain.
Maddie Walker, Industry X lead for Accenture UK, noted that while the sector is on a positive trajectory, the easing in growth may indicate manufacturers are adopting a holding pattern. She suggested that, to stimulate further growth, manufacturers should explore new technologies such as industrial AI to reduce costs and improve efficiency.
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