GOOD NEWS AND BAD We start the new year with things looking marginally rosier for the UK manufacturing sector than you might expect. For example, 2025 ended with the news that the sector grew for the first time in more than a year, according to the S&P Global UK Manufacturing PMI (Purchasing Managers’ Index), which hit a 14month high of 50.2 in November – the first time it has been in expansion territory (above 50) since September 2024. Domestic demand strengthened, while the downturn in new export work eased to a 12-month low. Breaking down the data by company size suggests that while large firms have increased their production volumes, SMEs experienced renewed downturns, and foreign demand dropped for the 46th month in a row. However, the outlook for the manufacturing sector showed some positivity. Business optimism rose to a nine-month high, with 56% of manufacturers reporting that they expect their output to be higher a year from now. Only 11% are anticipating a contraction. On the other hand, manufacturing job losses continued to mount for the 13th month in a row. Then, in mid-December, Make UK and BDO released their Q4 Manufacturing Outlook, based on a survey of 263 companies. This revealed that both UK and export orders had expanded during the quarter, and that investment intentions remained positive (at +19%). But the good news ends there. The report also showed that recruitment had weakened significantly, and that confidence had dropped for a second quarter in a row. And, after expanding by about 0.5% in 2025, Make UK now expects the UK manufacturing sector to contract by a similar amount this year. James Brougham, Make UK’s senior economist, cautions that “the prospects for any form of significant growth remain remote”. “It’s now essential that Government brings forward the proposed energy support scheme and, at the same time, extends it right across the sector so the broadest possible range of companies are covered,” he adds. “With firms set to take a hit on increased employment costs, employers also want to see reassurances from Government that the upcoming Employment Rights Bill will not add further financial burdens on businesses.” Richard Austin, BDO’s head of manufacturing, describes 2025 as “a volatile one for UK manufacturers. While the last six months have shown tentative signs of growth in output and orders, the sector is lacking the confidence and assurance they need to put their hands in their pockets and invest.” Although the November Budget gave manufacturers some relief in terms of investment, green transition and positive skills measures, “it fell short in addressing some of the biggest concerns the sector is facing,” Austin warns. “Businesses need decisive action if growth is to be realised.” So, despite some glimmers of hope, is seems that 2026 will be another tough year for UK manufacturers. It sometimes seems difficult to discern any light at the end of the tunnel. Tony Sacks, Editor n COMMENT pot en ti a l o f y o Are you inve our workforce? esting in the mproves Comp Creates an Adaptable a ncreases Productivi mproves Safe W Industry recognised co I I a I any Reputation nd Flexible Workforce y and Performance orking Practices ourses from the BFPA W t a p Please call 01608 6479 00 or bfpa.co.u RITISH FLUID POW B email enquiries@bfpa.co.uk k/training WER ASSOCIATION / Drives&Controls Follow us on LinkedIn @Drives & Controls Join us on Facebook Drives & Controls Follow us on X @DrivesnControls For the latest news visit www.drivesncontrols.com Drives& Controls
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