The decline in UK manufacturing activity was marked by a drop in the S&P Global UK manufacturing purchasing managers' index, which fell to a 17-month low of 44.9 points in March from 46.9 in February. It, however, beat the flash estimate of 44.6. Falling further from the neutral 50-point mark separating growth from contraction, it indicates the pace of decline sped up in March.
Worsening Conditions and Decline in New Orders
Pertinently, the decline in new orders was at the sharpest rate in 19 months, S&P Global said. UK manufacturing production contracted for the fifth consecutive month and at the quickest pace since October 2023. Factory owners surveyed noted a tough trading environment amid rising geopolitical tensions, weak client confidence, and economic slowdown in domestic and overseas markets, S&P Global said.
Challenges Facing UK Manufacturers: Tariff and Economic Concerns
S&P noted potential tariff uncertainty, which undermined current and expected future conditions. It said: "The downturn was widespread, with contractions signalled across all sub-sector definitions [consumer, intermediate and investment goods] and all size categories [small, medium and large]. Small-scale producers saw the steepest decrease in output."
Factors Impacting the Decline in UK Manufacturing Activity
Rob Dobson, director at S&P Global Market Intelligence, said: "Companies are being hit on several fronts. Many reported that domestic market conditions are deteriorating, costs are rising due to changes in the national minimum wage and national insurance contributions, geopolitical tensions are intensifying, and global trade faces potential disruptions from tariffs."
Cost Caution and Employment Cuts Amid Decline in UK Manufacturing Activity
"Fears about current and future performance put manufacturers on an increasingly cost cautious footing, with employment, stock holdings and purchasing all falling as companies looked to work leaner and protect cash flow, margins and competitiveness. Many firms are clearly hunkering down as they expect difficulties to continue in the coming months," he said.
