The UK manufacturing sector returned to growth in May; self-confidence in business improves

According to S&P Global, the UK manufacturing sector returned to growth in May this year, with output growing at its fastest pace in over two years thanks to increased inflows of new work.

The outlook also improved as positive manufacturer sentiment reached its highest level since early 2022, with 63% of companies expecting production to increase in the coming year.

According to S&P Global, the UK manufacturing sector returned to growth in May, with output growing at its fastest pace in over two years. The outlook also improved as positive manufacturer sentiment reached its highest level since early 2022. The inflow of new workers and market conditions improved, and efforts were made to terminate existing contracts.

The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) rose to 51.2 in May, up from 49.1 in April, the highest reading since July 2022 but slightly lower than the earlier flash estimate of 51.3.

The main PMI index has been above the neutral mark of 50 for two of the last three months.

In May, industrial production grew at the fastest pace since April 2022, and the recovery affected both the sector and company size.

All three product categories in the study – consumer, intermediate and capital goods – and all three size definitions – small, medium and large – saw simultaneous growth for the first time in more than two years, S&P Global said in a statement.

Production growth was based on greater additions of workers, stronger market conditions and efforts to terminate existing contracts.

The level of new business with UK manufacturers has increased for the second time in the last three months and by the largest increase since April 2022.

The recovery in demand was focused on the domestic market as new export orders fell for the twenty-eighth consecutive month.

The flow of new work from several trading partners decreased, including the United States, the European Union (with particular emphasis on Germany and Poland) and the Middle East.

Business confidence has improved as current market conditions recover. Manufacturers reported the highest degree of optimism regarding production volume forecasts one year ahead from February 2022.

The positive sentiment was related to the hope that further economic recovery, promotional activities and improved export orders would support growth in the future.

However, some companies also noted concerns about political and economic uncertainty, both at home and abroad.

Considerations related to operational efficiency, cost management and lean production remained at the forefront of manufacturers’ decision-making in May.

Employment declined for the twentieth month in a row, and both stocks of finished goods and purchases were depleted.

Input purchases rose slightly in May, halting a 22-month sequence of reduced purchasing activity. Supplier delivery times extended for the fifth month in a row, mainly due to transport issues such as the ongoing Red Sea crisis.

In May, average production costs increased for the fifth month in a row, although to a lesser extent than in April.

Fiber2Fashion Information Desk (DS)