December witnessed notable growth within the UK manufacturing sector, marking the third consecutive month of output increase and the first rise in new orders since September 2024. Trends in export orders and employment showed signs of stabilisation following prolonged downturns.
The S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) recorded a rise to 50.6 in December from 50.2 in November — its highest level in 15 months, though below the flash estimate of 51.2. The PMI has remained above the neutral 50.0 threshold for two consecutive months, indicating sustained growth.
Improved operating conditions were reflected in three PMI sub-components, with output and new orders rising, and suppliers’ delivery times lengthening. Although stocks of purchases and employment declined, the decrease was less pronounced than in November. The rise in manufacturing output was driven by stockpiling of finished goods and backlog clearance. Reduced headwinds, such as uncertainties around the Autumn Budget, tariffs, and the JLR cyber-attack, eased towards the year’s end.
Growth was observed across consumer, intermediate, and investment goods sectors, marking the first concurrent expansion since August 2024. However, large manufacturers primarily drove this growth, with small- and medium-sized enterprises experiencing downturns. New work intakes, bolstered by domestic demand, contributed to increased production volumes, although export orders continued to decline for the forty-seventh month. Nonetheless, the rate of decline in export business was mild, with demand showing signs of recovery in the US, APAC, and Middle East regions.
Manufacturing employment decreased for the fourteenth consecutive month, albeit at the weakest rate in this period. Reductions in staff were linked to redundancies, non-replacement of leavers, hiring freezes, and cost control measures. Despite job cuts, excess capacity persisted, as backlogs contracted for the forty-fourth month, albeit at a slower pace.
December saw a mild increase in price pressures, with input cost inflation and output charges rising. Average purchasing costs have consistently increased over the past two years, with electronics, energy, metals, and packaging components contributing to higher input prices. Small- and medium-sized producers faced greater cost pressures than large manufacturers. After a decline in November, factory gate prices resumed their upward trend in December.
Business confidence dipped from November’s nine-month high, with manufacturers expressing concerns over high costs, increased taxation, reduced competitiveness, geopolitical uncertainty, and potential government policy impacts.
Rob Dobson, Director at S&P Global Market Intelligence, noted, “UK manufacturers ended the year with signs of growth. Domestic demand spurred growth, while export business showed signs of stabilisation despite a prolonged decline.”
Chris Barlow, head of manufacturing at MHA, commented, “The final manufacturing PMI for December indicates modest confidence for 2026, although financial pressures remain. Manufacturers are cautious about hiring and are exploring efficiency improvements.”
Dave Atkinson, UK Head of Manufacturing at Lloyds, added, “Ending 2025 with a PMI uplift provides an encouraging start to the new year. Firms hope for renewed momentum to drive investment, innovation, and progress in energy transition, while strengthening the sector’s skills base remains critical.”
The outlook for 2026 hinges on maintaining domestic demand and navigating ongoing global trade challenges, with geopolitical uncertainties prompting businesses to reconsider supply chain configurations.
