In a significant shift for the British economy, the manufacturing sector has finally edged into growth territory, marking its first expansion in over a year. This fragile recovery comes after a prolonged period of contraction that has piled pressure on the industry.
PMI Data Shows a Tentative Turnaround
The closely watched S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) rose to 50.2 in November, up from 49.7 in October. This figure represents a 14-month high and, crucially, moves the index above the 50.0 threshold that separates contraction from expansion.
The survey closed just one day before Chancellor Rachel Reeves delivered her Autumn Budget on 26 November. According to the report, November saw a “stabilisation in new business following a 13-month sequence of contraction.” Furthermore, business optimism climbed to a nine-month peak, with just over half of manufacturers expecting their output to be higher in a year's time.
Industry Reaction and Budget Analysis
Rob Dobson, Director at S&P Global Market Intelligence, offered a cautious interpretation of the figures. “It will be interesting to see the extent to which business might react to the absence of any significant growth-promoting measures,” he stated. “After all, despite the improvement in the performance of the manufacturing sector, any growth is still worryingly weak.”
He added that the combination of soft industrial performance and easing price pressures could shift the policy debate away from inflation fears and towards the need to support economic growth.
The sector's leading body, Make UK, had warned the government prior to the Budget about “existential threats” and the need to prioritise growth. Experts cautioned that any recovery might be “short-lived” if new burdens were placed on firms.
Challenges and Mixed Verdict on Policy
The industry has faced severe headwinds, notably a major cyber attack on Jaguar Land Rover that halted production for five weeks from 1 September and triggered an estimated £1.9bn hit, slashing car output by almost 30% that month.
Following the Budget, Stephen Phipson, Chief Executive of Make UK, gave a mixed response. He commended the Chancellor for intervening to start a consultation on the business energy support scheme, calling it vital for tackling the UK's “eye watering and uncompetitive industrial energy prices.”
However, he highlighted significant downsides: “Restricting tax relief on salary sacrifice and, a further increase in the National Living Wage mean that manufacturers are again facing greater barriers to successful recruitment and retention of skilled staff.” Phipson concluded by noting that while the government promised growth as its primary mission, “we have yet to see any significant upswing in our economic performance and productivity.”
The government did reverse one contentious plan from the looming Employment Rights Bill that would have given all new staff protection from unfair dismissal from their first day, following fierce opposition from industry and the House of Lords.
