The UK manufacturing sector continued to struggle in May, weighed down by weak global demand, ongoing trade turbulence, and rising costs, according to the latest data from S&P Global.
The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index™ (PMI®) rose to a three-month high of 46.4 in May, up from 45.4 in April and above the earlier flash estimate of 45.1. Despite the modest improvement, the reading remained below the neutral 50.0 mark, indicating contraction in the sector for the eighth consecutive month.
Four of the PMI’s five components—output, new orders, employment, and stocks of purchases—signaled ongoing deterioration. Manufacturing production fell for the seventh month in a row, as firms scaled back output in response to subdued demand from both domestic and international markets.
Total new business volumes declined for the eighth straight month, with many companies reporting that clients remained hesitant to commit to new contracts. Factors cited included global market uncertainty, low customer confidence, and rising cost burdens linked to increases in UK employer National Insurance Contributions (NICs) and minimum wages.
Foreign demand also remained under pressure, falling for the 40th consecutive month. While the pace of decline eased slightly from April, firms noted weaker inflows from both EU and US markets. Exporters pointed to tariff uncertainty, unstable government policies, and global market volatility as key concerns.
Despite the gloomy backdrop, there were tentative signs of stabilization. Indices tracking output and new business both rose for the second month in a row and exceeded earlier flash estimates, hinting at a potential easing in the pace of the sector’s downturn.
However, the slowdown was broad-based. All three product categories—consumer, intermediate, and investment goods—as well as firms of all sizes experienced contractions in both output and new orders. Small-scale manufacturers were hit particularly hard, registering the steepest declines.
Confidence among manufacturers remained historically subdued, although it improved to a three-month high. Only 49% of respondents forecast higher output over the next year, compared to 13% expecting a decline. Sentiment was especially weak among small firms, nearing a record low, while optimism rose modestly among medium and large businesses.
Amid the uncertain outlook, manufacturers adopted a more cautious stance. Employment, purchasing activity, input inventories, and finished goods stocks were all reduced as firms sought to protect margins and manage costs.
Supply chains also came under renewed strain, with average vendor lead times lengthening at the fastest rate so far this year, linked to port disruptions, material shortages, and tariff-related issues.
Input price inflation eased to a five-month low but remained a concern. Manufacturers attributed higher costs to energy prices, freight charges, tariffs, and suppliers passing on their own cost increases. Some of these pressures were mitigated by raising selling prices.
Despite the slight uptick in the PMI, UK manufacturers continue to face a challenging operating environment as economic uncertainty and rising costs cloud the outlook for the sector.
