Looking for a used or new machine tool?
1,000s to choose from
Machinery-Locator
Hurco MPU Mills CNC MPU 2021 Ceratizit MPU

Machinery-Locator
The online search from the pages of Machinery Market.

Toshiba TX 16 Elevating Rail Vertical Borer

Toshiba TX 16 Elevating Rail Vertical Borer
Serial Number 320156
Year of Manufacture 8/1981
Tab
Toshiba TX 16 Elevating Rail Vertical Borer Serial Number 320156 Year of Manufacture 8/1981 Tab...

Be seen in all the right places!

Metalshow & TIB 2025 METALTECH & AUTOMEX 2025 Intermach 2025 Plastics & Rubber Thailand 2025 ITM Industry Europe EMO 2025 MACH 2026

UK manufacturing production falls for third month in a row

Posted on 04 Feb 2025. Edited by: John Hunter. Read 437 times.
UK manufacturing production falls for third month in a rowThe start of 2025 saw UK manufacturing production, new orders and employment continue to contract, as companies faced weak market conditions at home and abroad. Cost burdens also swung higher, with input price inflation rising to a two-year high.

The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) posted 48.3 in January, up from December’s 11-month low of 47.0. The PMI has signalled a deterioration in overall operating conditions in each of the past four months, with its level negatively impacted by four of its five components. Output, new orders, employment and stocks of purchases all declined, whereas average vendor lead times lengthened.

Manufacturing production fell for the third month in a row in January, albeit at the slowest pace during that sequence. Weak demand and lacklustre business and consumer confidence were the main factors underlying the latest scaling back of output volumes. The downturn was centred on the consumer goods industry where the rate of decline accelerated to its sharpest since December 2023.

The investment and intermediate goods industries were brighter spots, seeing output return to growth for the first time in three and four months respectively. The level of incoming new business decreased for the fourth straight month in January. There were reports that changes to minimum wage legislation and employer national insurance (NI) contributions announced in the recent Budget were raising concerns about costs and reducing confidence, leading to cutbacks in non-essential expenditure at manufacturers and their clients alike.

Conditions remained weak in both domestic and overseas markets at the start of 2025. New export business has now fallen throughout the past three years, with reports of lower intakes of new work from the EU and Middle East during the latest survey month. Data on output and new orders broken down by company size signalled that the retrenchments in both variables hit small-size manufacturers the hardest. Downturns were also signalled for medium-size firms, whereas production and new order intakes moved back into expansion territory for large companies. A similar picture was painted for the labour market, with rates of job loss steeper at small- and medium-size firms compared to the cuts made in the large-size category.

Redundancies

January saw the overall level of employment in the UK manufacturing sector decrease for the third successive month. Moreover, the rate of decline was the quickest for almost a year (since February 2024). There were reports of redundancy programmes, natural attrition and workforce restructuring being implemented to reduce costs. This process was often linked to changes to the minimum wage
and employer National Insurance (NI) announced in the recent Budget.

Signs of excess capacity and low levels of business optimism also contributed to the latest reduction to staff headcounts. Backlogs of work fell for the 33rd month running, with small-size manufacturers making the largest inroads into work-in-hand (although declines were also seen at medium and large companies).

Optimism among manufacturers remained at one of its weakest levels over the past two years, recovering only mildly from the 24-month low hit in December. Lacklustre sentiment was blamed on government policy, recession fears, rising costs, higher interest rate expectations and cutbacks to non-essential spending.

January saw a resurgence in price pressures, with input costs and output charges both rising at accelerated rates. Purchase price inflation hit a two-year high, with the steepest upswing at consumer goods producers. Increased costs reflected suppliers’ raising prices to reflect their own cost increases, material shortages and higher transportation costs. Supply chains remained under duress in January. Increased shipping times, the Red Sea crisis, backlogs at ports, container shortages and regulatory issues all contributed to longer lead times.

Weak market demand

Rob Dobson, director at S&P Global Market Intelligence, said: “The start of 2025 has seen the downturn in the UK manufacturing sector continue. Factory output, new orders and employment all fell further in January as companies faced weak market demand, rising costs and a deteriorating outlook.

“The latest survey also suggests that this retrenchment is being hardest felt among small companies. Large-size manufacturers fared better, seeing output and new orders recover during January. There nevertheless seems little scope for any imminent improvement in performance across the board. Demand conditions remain weak in both domestic and overseas markets, cost pressures are rising and will likely continue to do so as changes to the minimum wage and employer NI announced in last year’s Budget feed through.

“Business optimism consequently remains close to December’s two-year low, while input price inflation has spiked to a two-year high. A stagnant economy and rising cost burdens leave policy makers with a real dilemma, balancing the need for rate cuts to support flagging growth and a declining labour market against the need to contain inflationary pressures.”

Ginni Cooper, manufacturing partner at MHA, a leading accounting and advisory firm, said: “Although the rate of decline in manufacturing output has thankfully eased slightly according to the PMI figures out yesterda, the sector remains in a fragile state and is currently facing a near perfect storm. Increasing labour costs, weak demand in the UK and the EU plus concerns about future tariffs from the USA do not make a happy picture. Price increases for customers are unfortunately inevitable.

“On the upside our clients are now prepared for April and the tax rises that are coming and as long as there are no unexpected further surprises in the form of employment or corporation tax rises they can begin to plan for the future with more stability and confidence. The sector has a reputation for innovation and battling through difficult times.

“The imminent launch of the long-awaited Industrial Strategy in late March which we hope will galvanise the sector and the expectation of interest rate cuts throughout the year in the UK and the EU also suggest there are better times ahead for manufacturers.”

Chris Spray, customer success director at Lineview, a supplier of smart factory solutions, said: “While the increase in National Insurance has been framed as an added burden, it also serves as a catalyst to boost productivity. With labour costs rising, manufacturers have a clear incentive to invest in automation, AI-driven efficiency and smart supply chains. Other leading economies are already accelerating in this direction and without similar action, UK manufacturing risks falling behind.

He concluded: “The Government‘s much anticipated industrial strategy presents an opportunity to turn the tide. Targeted support for smart manufacturing, workforce upskilling and productivity-enhancing technology must be central to any recovery plan. Without this, the sector risks stagnation just as others accelerate towards a more resilient, tech-driven future.”