UK manufacturing activity remained in decline during May, as weak global demand, trade uncertainty, and rising costs continued to pressure the sector. Output, new orders, exports, and employment all fell, reflecting ongoing operational challenges.
The S&P Global UK Manufacturing PMI rose slightly to 46.4 in May from 45.4 in April—a three-month high, but still below the neutral 50.0 mark, indicating contraction for the eighth consecutive month. Economists had expected the index to fall to 41.1. Four of the five PMI components (output, new orders, employment, and input stocks) signaled deterioration.
Despite overall weakness, there were early signs of improvement. Indices for output and new business rose for the second month in a row and exceeded initial estimates, suggesting a possible easing of the downturn.
Production declined for the seventh straight month, driven by falling new orders both domestically and abroad. Clients cited global uncertainty, increased employer National Insurance contributions, and minimum wage hikes as reasons for reduced spending. While some firms saw a sales boost from favorable weather, most sectors—consumer, intermediate, and investment goods—saw declines across all company sizes, with small firms hardest hit.
Export orders fell for the 40th month in a row, though at a slower pace. Weaker demand from the EU and US contributed to the drop, alongside ongoing concerns about tariffs and policy instability.
Business confidence edged up to a three-month high but remained subdued. Just under half of manufacturers (49%) expected growth over the next year, with small firms reporting particularly low optimism.
Input cost inflation eased to a five-month low, though many firms still faced rising energy, freight, and supplier prices. Some were able to pass these increases on to customers via higher selling prices.