Final data published by S&P Global/CIPS showed that business activity in the UK manufacturing sector declined last month and reached its lowest level since October 2023, as new business growth fell at the steepest rate for 1.5 years. Business confidence slumped to a near 2.5 year low amid concerns about government policy, rising costs, increased geopolitical tensions and potential tariff uncertainty.
The UK manufacturing PMI fell to 44.9 points from 46.9 points in February. Economists had expected a decline to 44.4 points. An index remains below the level of 50 points, which indicates a contraction in activity in the sector, for the 6th month in a row.
The report also showed that manufacturing output declined for the fifth consecutive month, marking its fastest drop since October 2023. The downturn affected all sectors (consumer, intermediate, and investment goods) and company sizes, with small-scale producers experiencing the sharpest fall.
The primary cause was a steep decline in new business, with orders falling at the fastest rate since August 2023 and one of the sharpest since the 2020 pandemic lockdowns. Manufacturers faced a challenging environment due to geopolitical tensions, weak client confidence, and economic slowdowns both domestically and internationally. Export orders declined for the 38th consecutive month, with demand weakening in the US, Europe, China, India, and the Middle East.
Business confidence among manufacturers hit a 2,5 year low, with only 44% expecting growth, down from 56% in February. Cost-cutting led to reductions in employment, stock levels, and purchasing activity. Though staffing levels declined for the fifth straight month, job losses slowed compared to February’s near five-year high. Input price inflation eased slightly from February’s peak, but costs for chemicals, electronics, energy, metals, packaging, and transportation continued rising. Factory gate prices saw their fastest increase since April 2023.