UK manufacturing output expanded for the first time in a year during October, as companies depleted backlogs of work, increased stocks and, in some cases, were boosted by a restarting of production at Jaguar Land Rover following a recent cyber-attack.
Key findings
- Manufacturing PMI at 49.7 in October
- Output rises for first time in a year
- Total new orders and new export orders contract at slower rates
- HCOB Eurozone Manufacturing PMI reveals a similar picture
The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index™ (PMI®) rose to a 12-month high of 49.7 in October, up from 46.2 in September.
Three of the PMI constituents (new orders, employment and stocks of purchases) registered contractions, while sub-indices for output and suppliers’ delivery times were at levels consistent with improved operating conditions.
A rise in production, but challenges persist
Sector data signalled that production volumes rose in the consumer and intermediate goods industries. Growth was stronger in the latter, partly reflecting a boost to some manufacturers (mainly those sensitive to the autos supply chain) from the staged restarting of production at JLR.
Although investment goods output contracted for the twelfth successive month, the rate of decline was the weakest during that sequence. Market conditions faced by manufacturers remained tough, however, with demand from both domestic and overseas markets decreasing during the latest survey month.
October saw total new business contract for the thirteenth month in a row, albeit to a weaker extent than in the prior month. All three of the sectors covered by the survey saw new order intakes contract, with the steepest fall at investment goods producers and the slowest in the intermediate goods category.
October also saw the level of new export orders decline for the forty-fifth successive month, amid reports of weaker demand from the US, the EU, Asia and the Middle East. Weak global market conditions, ongoing tariff uncertainties and UK competitiveness issues were all mentioned as factors leading to reduced overseas demand. Although business optimism climbed to an eight-month high, it remained below its long-run average.
A similar story in Europe
Manufacturing output across the euro area expanded again in October, stretching the current run of expansion into an eighth month. That said, the pace of growth remained mild amid stagnant new orders and lower employment.
Inventory reductions continued, with volumes of both production inputs and finished goods decreasing to extend a protracted sequence of destocking. Notably, Input costs were unchanged from September, but prices charged were increased marginally.
Looking ahead, eurozone manufacturers were optimistic that output levels would be higher in 12 months’ time. However, expectations nudged slightly lower on the month and were weak by historical standards.
Higher output expected but talent concerns persist
Over half of panellists expect their output to be higher one year from now, compared to 12% forecasting contraction. Positive sentiment was linked to economic recovery, efforts to regain market share, promotional activity and new product launches.
In contrast, tariff uncertainty (especially the effect on overseas client confidence), domestic fiscal policy concerns, a weak global economy and heightened geopolitical tensions all weighed on UK manufacturers’ sentiment.
Employment contracted for the twelfth consecutive month in October, as the impact of subdued demand and earlier labour cost increases (namely higher minimum wages and employer NICs) continued to drive job losses.
There were reports of natural attrition, hiring freezes, cost-control initiatives and difficulties finding appropriately skilled staff. That said, the overall pace of job loss eased to its weakest during the current sequence of decline, with rates decelerating across the consumer, intermediate and investment goods industries.
High cost and stretched supply chains
Although October continued to see manufacturers report operating in a high-cost environment, there were further signs that purchase price inflationary pressure is easing.
Average input costs rose at the slowest pace so far in 2025, as decelerations in the consumer and intermediate goods industries offset steeper cost increases at investment goods producers.
Companies reported higher prices for commodities, energy, food stuffs, plastics and timber. Exchange rates, shipping issues and supply shortages were also mentioned. Small manufacturers tended to experience sharper cost increases than medium and large-scale producers. Part of the increase in costs was passed on to clients leading to a further rise in average selling prices.
Supply chains remained stretched in October, reflecting supplier capacity issues, shipping difficulties and port disruption. This was despite a further decrease in purchasing activity among manufacturers.
Industry reaction
Dave Atkinson, UK Head of Manufacturing for SME & Mid Corporates at Lloyds, said:
“An improvement in activity could reflect early signs of a gradual improvement for the sector.
“Despite recent pressures, UK manufacturers continue to show resilience, supported by robust supply chains that have been resourceful in ensuring continuity of output as demand increases. Continued investments in capacity and efficiency will help to ensure manufacturing firms are in a stronger position to take advantage of future growth opportunities.”
Richard Powell, Partner at MHA, commented:
“The rise in the manufacturing PMI figure is no surprise given the exceptional circumstances of the JLR closure and then restart. While welcome news that the pace of decline has slowed, at below 50, the data suggests a sector still in contraction and does little to alter the malaise that currently hangs over the sector at present. Manufacturing is in a ‘wait and see’, if not ‘wait and anxiously hope’ mode.
Certainly, our clients are telling us that corporate activity and investment is almost at a standstill barring a few transactions being brought forward to complete by 26 November to avoid the implications of potential tax changes that might be introduced in the Budget.
It is hard not to overestimate the importance of the Autumn Budget to the sector. The industry, long considered the backbone of the British economy, finds itself at a critical juncture, from rising costs, global competition, to policy uncertainty. This is a vital opportunity for the government to demonstrate its commitment to revitalising UK manufacturing.
The sector is not asking for handouts, they are asking for clarity, consistency, and commitment. The Chancellor must deliver a framework that enables long-term planning, supports innovation, and restores confidence in the UK as a manufacturing powerhouse. Anything less risks leaving the industry further adrift at a time when global competitors are surging ahead.”
Mike Thornton, Head of Industrials at RSM UK, said:
“While the uptick in manufacturing activity in October shows a reverse on the downward trend seen in August and September, only time will tell if this is a temporary rebound in output rather than a sustained recovery.
Following Jaguar Land Rover’s phased production restart in October, it’s likely that this has created a ripple effect throughout the supply chain, particularly as the shutdown impacted over 5,000 middle market businesses.
“The impact of the restart will also likely be reflected in the increase to new orders, employment and output indices, as businesses look to address backlogs of work. However, there are wider signs of domestic improvement, with input prices dropping to their lowest level since December 2024, suggesting inflationary pressures are easing. This has offered some relief to manufacturers following months of price pressure.”
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