Manufacturing activity up following three months of sustained growth
Commenting on the latest CIPS UK Manufacturing Purchasing Managers’ Index, which has increased to 50.2 in November, up from 49.7 in October, Mike Thornton, Head of Industrials at RSM UK, said:
“A three-month consecutive uptick in manufacturing activity tipped the PMI index above 50 highlighting expansion for the first time since September last year. Jaguar Land Rover’s phased restart continued to support activity and new orders also jumped to 50 in November showing that not even budget speculation could derail production. In addition, stocks of finished goods dropped from 51.1 to 47.7 in November indicating strong sales, and with an improving pipeline of new orders, production looks set to increase into 2026.
“Following widespread speculation of imminent tax increases, manufacturers will be breathing a sigh of relief following the recent budget which reconfirmed commitment to two key policies in the UK Industrial Strategy and the Corporate Tax Roadmap - delivering much-needed certainty and stability to help industry invest and thrive.”
He added: “Extra funding in the budget for the Youth Guarantee and Growth and Skills Levy, and visa system reform, will be welcome news for industry to tackle the growing skills gap and shape its future workforce. However, reduction in crippling energy costs will have to wait until 2027 and future investment for advanced manufacturing is a longer-term pledge, restricting manufacturer’s ability to counteract global pressure now, and ultimately putting the brakes on the speed in which manufacturers could grow.”
Thomas Pugh, chief economist at RSM UK, said: The increase in the PMI in November suggests that the gradual ramp up of production at JLR more than offset any concerns ahead of the budget. Now that we know there won’t actually be any significant increase in taxes next year, we may get a boost in confidence in the December figures. Indeed, the future output index was revised marginally higher.
“That does also mean we are unlikely to get many more interest rate cuts next year. But the sharp drop in the output prices index from 53.0 to 48.8 will be another vote in favour of a December rate cut, which we feel is now nailed on.”