UK manufacturing shrinks again but may be turning a corner

The UK manufacturing sector shrank again last month but may be “turning a corner”, according to new figures.

Factories saw the recent downturn linked to trade tensions, US tariffs and higher costs slow down during May but highlighted that confidence was still “subdued”.

The S&P Global UK manufacturing PMI survey, watched closely by economists, showed a reading of 46.4 in May, up from 45.4 in April.

Any reading above 50 indicates that activity is growing while any score below means it is contracting. The sector is, therefore, still contracting, but at a slower rate.

It was a stronger performance than expected, with economists having predicted a reading of 45.1 for the month.

Rob Dobson, director at S&P Global Market Intelligence, said: “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.

“There are some signs of manufacturing turning a corner, though.

“PMI indices tracking output and new orders have moved higher in each of the past two months, suggesting the downturn is easing, and came in better than the earlier flash estimates for May.”

Firms saw factory production contract again as companies scaled back production due to a reduction in new work, both in the UK and from overseas clients.

Total new business volumes also decreased further, although this was at a slower rate than the previous month.

Weak global market conditions, trade uncertainty, low customer confidence and cost pressures linked to the recent rise in employer national insurance contributions were all linked to the continued decline.

However, some firms indicated that warmer weather conditions helped support positive sales in May.

The latest figures come amid continued uncertainty over US President Donald Trump’s tariff plans, which continued to change in recent weeks.

Mr Trump said a new 50% import tariff on steel and aluminium will come into force on Wednesday.

The US agreed earlier this month that it will ultimately drop these tariffs from imports of these products from the UK, but firms in these sectors are now expected to face the 50% rate until the details on UK-US deal are confirmed.

Published: 02/06/2025 by Radio NewsHub