The start of 2025 saw UK manufacturing production, new orders and employment continue to contract, as companies faced weak market conditions at home and abroad. Cost burdens also swung higher, with input price inflation rising to a two-year high.
The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) posted 48.3 in January, up from December's 11-month low of 47.0.
The PMI has signalled a deterioration in overall operating conditions in each of the past four months, with its level negatively impacted by four of its five components. Output, new orders, employment and stocks of purchases all declined, whereas average vendor lead times lengthened.
Manufacturing production fell for the third month in a row in January, albeit at the slowest pace during that sequence. Weak demand and lacklustre business and consumer confidence were the main factors underlying the latest scaling back of output volumes.
The downturn was centred on the consumer goods industry where the rate of decline accelerated to its sharpest since December 2023.
The investment and intermediate goods industries were brighter spots, seeing output return to growth for the first time in three and four months respectively