The UK’s manufacturing sector experienced a significant resurgence in May, with production levels surging and business optimism reaching its highest point in over two years. The S&P Global/CIPS UK manufacturing PMI survey, a key indicator of the sector’s health, rose to 51.2 in May, up from 49.1 in the previous month. A score above 50 indicates growth, while below 50 signals contraction.
Production expanded at its fastest rate since April 2022, with all major categories—consumer, intermediate, and investment goods—seeing growth. Firms reported an increase in new work compared to previous months and renewed efforts to complete existing contracts. Rob Dobson, director at S&P Global Market Intelligence, highlighted the solid revival of activity, noting that production and new business rose at the quickest rates since early 2022. The recovery was broad, with concurrent output and new order growth across all subindustries and company sizes for the first time in over two years. While the upturn was mainly driven by a strengthening domestic market, there were signs of overseas demand stabilising.
This resurgence follows a turbulent period for manufacturers, marked by post-pandemic supply chain changes, disruptions in the Red Sea, and economic instability both domestically and internationally. Despite the strong output performance, rising prices across the sector pose challenges for policymakers at the Bank of England, indicating that inflationary pressures persist. Input prices increased again in May, though at a slower rate than in April, leading to output price inflation reaching a one-year high. The Bank is monitoring for signs that inflation is under control before considering interest rate cuts.
The manufacturing sector, accounting for less than 10% of the UK’s economic output, showed growth comparable to the much larger services sector, which grew at its fastest rate in nearly a year last month. Business optimism in manufacturing reached its highest level since early 2022, with 63% of manufacturers expecting higher output a year from now. Firms attributed their optimism to the ongoing recovery of the wider economy and improving export orders.
Caroline Litchfield, partner and head of manufacturing and supply chain at independent law firm Brabners, suggested that May could mark a turning point for UK manufacturing after nearly two years of weak output. She noted that manufacturers have reasons to be cautiously optimistic about the future, citing economic growth, manageable inflation levels, and the potential for interest rate cuts in the coming weeks. Litchfield also mentioned that a confirmed election date could boost business and consumer confidence, potentially benefiting order books. However, she emphasised the need for any incoming government to address the skills gap within the industry and support a transition to modern, sustainable manufacturing methods, which will be crucial for future growth.
Likewise Group PLC (LON:LIKE) is a distributor of floorcoverings and matting and has the opportunity to consolidate the domestic and commercial floorcovering markets to become one of the UK’s largest distributors in this sector.
