UK manufacturing downturn deepens in Mar 2025: S&P Global Ratings

Business confidence slumped to a near two-and-a-half year low, with only 44 per cent of companies expecting activity to rise over the coming year (down sharply from 56 per cent in February) as concerns about government policy, rising costs, increased geopolitical tensions and potential tariff uncertainty affected both current and expected future conditions.

The seasonally-adjusted S&P Global UK manufacturing PMI fell to a 17-month low of 44.9 in March, down from 46.9 in February but slightly above the earlier flash estimate of 44.6.

The PMI has now signalled a deterioration in overall operating conditions in each of the past six months.

March saw UK manufacturing production decline for the fifth straight month and at the quickest pace since October 2023.

The downturn was widespread, with contractions signalled across all sub-sector definitions (consumer, intermediate and investment goods) and all size categories (small, medium and large). Small-scale producers saw the steepest decrease in output, a release from S&P Global Ratings said.

By far the most significant factor underlying the retrenchment in production volumes was a slump in the level of new business received during March.

New order intakes fell to the greatest extent for over one-and-a-half years and at one of the quickest rates since the pandemic-hit months of 2020. The 6.9-point drop in the new orders index since February was also the joint-sharpest fall since 2020, further emphasising the severity of the acceleration in the pace of decline, the rating agency noted.

Manufacturers reported a tough trading environment, beset by rising geopolitical tensions, weak client confidence and economic slowdown in both domestic and overseas markets.

Disruption to new order inflows was also caused by concerns about the forthcoming rises to the national minimum wage and employer national insurance and the possibility of tariffs.

New export business contracted for the thirty-eighth successive month in March, and at the quickest pace since August 2023.

Lower intakes of new export work were mainly linked to weaker demand from the United States and Europe. Some firms also noted reduced levels of new business from China, India and the Middle East.

ALCHEMPro News Desk (DS)