Manufacturing & Supply Chain

UK manufacturing output rose for the second successive month in November, as the recent downturn in new business intakes halted. Survey data indicated that manufacturers benefited from improved domestic demand and a softer contraction in new export work.

The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index™ (PMI®) rose to a 14-month high of 50.2 in November, up from 49.7 in October, according to the S&P Global UK Manufacturing PMI® for November 2025. This was the first reading above the PMI’s neutral 50.0 mark since September 2024. The latest survey was conducted from 12-25 November, closing before the Chancellor’s Budget announcement on November 26.

Two of the PMI components (output and suppliers’ delivery times) were at levels consistent with improved operating conditions. Stocks of purchases and employment registered contractions and new orders were unchanged over the month. Although production volumes posted back-to-back expansions for the first time since late-2024, the increase was subdued and narrow by sector. The marginal upturn, which was weaker than that seen in the prior survey month, was dependent on a solid rise in investment goods production. In contrast, both the consumer and intermediate goods industries saw contractions. Data broken down by company size definitions suggested that only large firms saw production volumes increase, contrasting to renewed downturns at SMEs.

November saw a stabilisation in new business following a 13-month sequence of contraction. Manufacturers experienced a boost from improved sales to the domestic market, while the rate of contraction in new export business eased to a 12-month low. Foreign demand nonetheless declined for the forty-sixth month in a row, with reports of lower intakes of new business from clients in the US, EU, China and Brazil.

The outlook for the UK manufacturing sector continued to brighten. Business optimism rose to a nine-month high, with 56% of manufacturers reporting that they expect their level of output to be higher one year from now. This compared to only 11% anticipating a contraction. The cyclically sensitive new orders-to-finished goods inventory ratio also rose sharply to a five-month high.

Improved business sentiment reflected hopes for a market stabilisation, planned company expansions, new product launches, rising client enquiries and forecasts that the deployment of new technologies (such as AI and investments in data centres at both manufacturers and their clients) would stimulate growth and improve overall competitiveness. There also remained several reports citing concerns about the direction of UK Government policy, trade uncertainties (including tariffs), high costs and weak client confidence.

Manufacturing job losses were registered for the thirteenth month running in November. Job losses were linked to cost savings, the non-replacement of leavers, redundancies and recruitment freezes. The higher cost associated with hirings (following increases to NMW and employer NICs) and uncertainty in the lead up to the UK Budget were also mentioned. Cuts were made to full-time, part-time, agency and temporary staff. Signs of excess capacity remained, however, as backlogs of work decreased at the quickest pace since April.

Supply chains remained strained in November. Average vendor performance deteriorated to the greatest extent in almost a year, reflecting supplier capacity issues, raw material shortages, transportation disruptions and port/customs delays.

Factory gate selling prices fell for the first time in over two years, amid reports of weak market conditions, pressure from clients for discounts and efforts to maintain competitiveness. Input price inflationary pressures eased for the third month running, with purchasing costs rising at the slowest pace since October 2024.

Rob Dobson, Director at S&P Global Market Intelligence, commented: “November saw further signs of recovery in the UK manufacturing sector. The headline PMI is back in growth territory for the first time in over a year, with output up for a second month and the trend in new business stabilising following 13-months of continual decline. Business optimism has also continued its recovery, rising to a nine month high.

“The numbers are especially encouraging as this improvement occurred despite November seeing elevated levels of business uncertainty, and in some cases an element of gloom, ahead of the Autumn Budget.

“The lifting of this uncertainty caused by the long lead-in to the Chancellor’s budget announcement should hopefully provide a boost in December, but it will be interesting to see the extent to which business might react to the absence of any significant growth-promoting measures. After all, despite the improvement in the performance of the manufacturing sector, any growth is still worryingly weak.

“Rising competitive pressures and slower cost inflation meanwhile led to factory gate prices being cut for the first time in over two years. This combination of soft industrial performance and subsiding price pressures will add to the shift in policy debate away from inflation fears towards supporting economic growth.”