**UK**: The UK manufacturing sector has recorded its lowest output in 18 months, as escalating costs and global trade disruptions lead to a fifth consecutive month of decline, with new business intake plummeting and exports suffering from weak demand amid geopolitical tensions and potential tariffs.
UK factory production experienced a significant decline in March, reaching its lowest point in one-and-a-half years, as manufacturers brace for escalating costs and global trade disruptions. The S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) survey revealed a reading of 44.9 for March, a notable decrease from February’s figure of 46.9. This downward trend continues for the fifth consecutive month, indicating contraction in the manufacturing sector, as any score below 50 signifies a decline in activity.
This latest score is the lowest recorded since October 2023, with the downturn affecting all segments of the industry, though smaller manufacturers appeared to have been hit the hardest. The survey indicated that new business intake fell at one of the most rapid rates since the pandemic of 2020, signalling a substantial worsening of conditions for manufacturers. Concerns over imminent increases to the national minimum wage and employer national insurance, which are set to be implemented this month, have contributed to the decline in new orders.
In addition, uncertainty surrounding potential tariffs imposed by US President Donald Trump has further complicated the situation for UK manufacturers. President Trump has enacted new tariffs on UK aluminium, steel, and vehicles exported to the US, aiming to bolster American production while protecting home-grown industries.
Rob Dobson, director at S&P Global Market Intelligence, commented on the multifaceted challenges facing companies. “Many reported that domestic market conditions are deteriorating,” he stated, adding that firms are grappling with rising costs due to changes in national wage policies and contributions to national insurance. “Geopolitical tensions are intensifying, and global trade faces potential disruptions from tariffs,” he explained. Dobson emphasised that the outlook for manufacturers is increasingly bleak, with overall business optimism dropping to its lowest levels since late 2022. “Many firms are clearly hunkering down as they expect difficulties to continue in the coming months,” he concluded.
The survey also revealed a decline in exports, driven by weaker demand from major markets, including the US and Europe, as well as reduced new business activity from regions such as China, India, and the Middle East. In light of these challenges, UK firms have continued to implement cutbacks across various areas. Although staff levels decreased for the fifth month in a row, the pace of job losses has slowed compared to the significant reductions seen in February.
James Brougham, senior economist for the manufacturing trade group Make UK, remarked on the urgency of the situation, urging the government to take note of the deteriorating conditions for manufacturers. “Unlike the last trough in activity in mid-2023 that was induced by the acute pressures of the energy crisis at the time, this is being driven predominantly by a steady and consistent decline in new orders for the sector,” Brougham noted, highlighting the drop in demand for UK goods along with the impact of global economic policy uncertainty and potential tariffs. He described the current situation as an “endemic challenge” compared to the difficulties faced in previous years.
Source: Noah Wire Services
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