UK manufacturing activity shrinks at fastest pace for five months

Activity in the UK manufacturing sector contracted at its fastest pace for five months in September after orders dropped, according to new figures.

The downturn came as firms linked to the car industry also warned that their supply chains were affected by production shutdowns at Jaguar Land Rover.

The S&P Global UK manufacturing PMI survey, watched closely by economists, showed a reading of 46.2 for the month, decreasing from 47.0 in August.

Any reading above 50 indicates that activity is growing while any score below means it is contracting.

It was in line with economist expectations for the month.

The survey showed a reduction in both domestic demand and export orders for the month as companies highlighted “challenging” market sentiment.

Manufacturers said they scaled back production as a result, marking the 11th consecutive month of declining production.

Worsening market conditions were also linked to weaker client confidence, US tariff uncertainty and higher costs.

Employment in the sector also slumped again, with companies reporting that they reduced headcount to offset higher costs following increases to the minimum wage and National Insurance contributions.

Rob Dobson, director at S&P Global Market Intelligence, said: “The final Manufacturing PMI results provide further worrying news for the health of UK industry.

“Manufacturers are facing an increasingly challenging environment, with intakes of new business and levels of production hit by weak market sentiment, a dearth of new export work and a high-cost environment exacerbated by tax and labour cost rises.

“Companies entwined into the autos supply chain are also facing a temporary hit to activity following the cyber-attack on JLR.”

Matt Swannell, chief economic adviser to the EY Item Club, said: “The weakness in September’s manufacturing Purchasing Managers’ Index (PMI) may be exaggerated by businesses’ concerns over tax rises at the upcoming Autumn Budget and temporary factory closures in the automotive sector.

“However, the sector certainly faces weak domestic and external demand as it navigates slowing real income growth, tightening fiscal policy, and a global economy that is still getting to grips with higher US tariffs.”