According to new research from S&P Global, the UK’s manufacturing sector has shown signs of recovery in recent months, with data from March showing a shift away from a year-long downturn.
S&P Global’s UK Manufacturing Purchasing Managers’ Index (PMI), which is seasonally adjusted, revealed that March saw a notable rise to 50.3. This represented a 20-month high, with February 2024 only recording a 47.5.
The rise above the neutral 50.0 mark is the first since July 2022, indicating a potential turnaround for the sector.
This growth was driven by increased output and new orders, with manufacturing production seeing its first uptick since February 2023. This was especially pronounced in the consumer goods sector, offsetting declines in intermediate and investment goods categories.
Although new business inflows experienced a mild increase, the growth was predominantly within the domestic market.
However, new UK export orders continued to lag, marking a 26th consecutive month of decline in global demand for British goods – albeit at the slowest pace since April 2023.
Rob Dobson, director at S&P Global Market Intelligence, commented on the recovery, noting the return to growth in production and new orders, largely driven by strengthened domestic demand. Business optimism also soared to an 11-month high, with 58% of companies anticipating output growth in the coming year.
However, challenges persist, including weak export performance and ongoing supply chain disruptions, exacerbated by the Red Sea crisis.
Despite these hurdles, James Brougham, senior economist at Make UK, expressed confidence in the manufacturing sector’s resilience, highlighting its ability to navigate challenging environments and capitalise on improving conditions.
While the UK’s manufacturing sector shows signs of progress, the situation in Europe remains mixed, with Germany’s manufacturing PMI hitting a five-month low at 41.9, while Italy surged to a 12-month high of 50.4, signalling a return to positive territory. France, however, lags behind with a PMI of 46.2.
However, overall Eurozone manufacturing output has contracted in all bar two of the past 22 months, according to the PMI survey data compiled by S&P Global.
The HCOB Eurozone Manufacturing PMI, also compiled by S&P Global, showed the twelfth successive monthly fall in factory output in March, which has fallen a total of twenty times successively in the past 22 months.
Despite this, the rate of sector contraction was measured at an 11-month low, which S&P explained shows promise of stability in the sector.
