UK manufacturing output and new orders accelerated in October, with business confidence also strengthening, although rising input costs and supply chain disruption continued to weigh on the sector, according to new figures released yesterday.
The latest S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) rose to 52.8 in October, up from 51.9 in September and reaching a five-month high. The reading was unchanged from the earlier flash estimate and marked a further month of expansion, with any figure above 50 indicating growth.
Manufacturing production increased for the seventh consecutive month, with the rate of expansion reaching its highest level in 25 months. Growth was broad-based across the consumer, intermediate and investment goods industries, although investment goods manufacturers recorded the strongest increase.
New business also gathered momentum, with order intakes rising at their fastest pace since July. Manufacturers reported improved demand from both domestic and overseas customers, while new export business increased for the tenth consecutive month. Export growth was supported by stronger sales to Brazil, mainland China, the European Union, the Middle East and the US.
However, the improvement in manufacturing activity did not translate into further employment growth. Staffing levels remained unchanged in October, bringing to an end a six-month sequence of job creation. Some manufacturers continued recruiting to meet increased production requirements, while others focused on delaying capacity increases to offset higher labour, transportation and raw material costs.
UK manufacturing showed resilience in the lead up to the Autumn Budget. Rates of growth in output and new orders both gathered pace in October, as companies responded to signs of improving demand in both domestic and overseas markets.
Rob Dobson, Director at S&P Global Market Intelligence
The survey was conducted between 12 and 27 October, meaning its findings do not reflect the UK Government’s autumn Budget statement delivered on 28 October.
Cost pressures and supply chain disruption
Rising costs remain a significant concern for manufacturers. Input prices increased for the 34th consecutive month, with the rate of inflation among the sharpest recorded over the past four years. Companies reported higher prices for a range of inputs, including energy, fuels, transportation, electronics, chemicals and metals. Some of these increases were passed on to customers, with manufacturers raising selling prices at the fastest rate in three months.
Supply chain pressures also intensified. Average supplier lead times lengthened to one of the greatest extents recorded over the past four years, with manufacturers reporting disruption caused by shipping rerouting, port congestion, material shortages and ongoing conflicts affecting key transport routes.
Purchasing activity increased for the third consecutive month as manufacturers responded to higher production requirements and brought forward orders to account for potential delivery delays. However, stocks of both inputs and finished goods continued to decline.
Despite the challenging cost environment, business confidence improved, reaching an eight-month high. Manufacturers cited planned business expansions, signs of market recovery, investment in capital equipment and AI infrastructure, including data centres, as reasons for optimism.
UK outpaces eurozone manufacturing growth
The UK manufacturing sector also outperformed its eurozone counterparts in October, according to separate S&P Global PMI data.
The eurozone Manufacturing PMI registered 52.7, marginally down from 52.9 in September, marking a second consecutive month of moderation. Although this represented the ninth successive month of expansion, output growth eased to a four-month low, while overall new business growth slowed. By comparison, the UK’s reading of 52.8 was marginally higher, with production growth accelerating to its strongest rate in more than two years. The eurozone also recorded stronger purchasing activity, employment growth and a significant increase in input stocks, although supplier delivery delays and inflationary pressures intensified.
Growth across the eurozone remained uneven, with six of the eight countries covered by the survey recording expansion. France and Italy were the exceptions, both reporting renewed deterioration in manufacturing conditions.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said sustained eurozone manufacturing growth since February represented an encouraging picture of resilience, despite headwinds from tariffs, geopolitical conflicts and rising costs.
However, he warned that accelerating input price inflation, driven by higher energy prices and supply bottlenecks, was adding to pressure on manufacturers and could create further challenges for the sector.
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