2nd Jun 2025 09:57
(Alliance News) - The UK manufacturing economy remained in contraction territory in May, numbers on Monday showed, amid weak global demand and turbulent market conditions.
The S&P Global UK manufacturing purchasing managers' index picked up to 46.4 points in May, from 45.4 in April, though it remained below the 50-point neutral mark. The reading topped the 45.1 point flash estimate.
The PMI has signalled a deterioration in performance for each of the past eight months, S&P Global said.
Manufacturing production contracted for the seventh consecutive month in May, in response to reduced new work from both domestic and oversees clients.
Total new business volumes also fell for the eighth month, as S&P Global reported a reluctance for clients to commit to new contracts.
"Weak global market conditions, trade uncertainty, low customer confidence and cost pressures resulting from recent increases to UK employer [national insurance contributions] and minimum wages also contributed to clients' reluctance to spend," S&P Global said.
However, there were "some tentative signs" of improvement.
Survey indices monitoring trends in output and new business rose for the second consecutive month and were above earlier flash estimates, which were calculated on May 20 compared to May 27 for the final readings.
Business confidence remained subdued, despite recovering to a three-month high. Less than half of the survey panel forecast growth of production volumes over the next 12 months.
S&P Global said manufacturers were on a "cost-conscious course" during May.
Emplyoment, purchasing activity, input stocks and finished goods inventories all fell, as companies "acted to protect margins and offset the impact of rising cost burdens from employer NICs, minimum wages and increased raw material costs".
Input price inflation eased to a five-month low.
"May PMI data indicate that UK manufacturing faces major challenges, including turbulent market conditions, trade uncertainties, low client confidence and rising tax-related wage costs. Downturns in output, new orders and new export business have continued, and business optimism has stayed subdued by the historical standards of the survey," said S&P Global Market Intelligence Director Rob Dobson.
"There are some signs of manufacturing turning a corner though...That said, trading conditions remain turbulent both at home and abroad, making either a return to stabilisation or a sink back into deeper contraction likely during the coming months."
The survey features a panel of 650 manufacturers. The responses were collected between May 12 and 27.
The service and composite PMI readings are released on Wednesday.
By Michael Hennessey, Alliance News reporter
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