UK manufacturing output grew for the third consecutive month in December, while new orders rose for the first time since September 2024, according to the latest S&P Global UK Manufacturing PMI. The seasonally adjusted index reached 50.6, its highest level in 15 months, up from 50.2 in November, indicating modest expansion.
Growth was driven by higher production across consumer, intermediate, and investment goods, though the boost came mainly from large manufacturers. Small- and medium-sized companies continued to see declines in both output and new orders.
Domestic demand was the key driver of new business, while export orders fell for the 47th month in a row, albeit at a slower pace. Signs of stabilisation were also evident in employment, which fell for the 14th consecutive month but at the weakest rate in over a year.
Price pressures increased slightly, with input costs rising across electronics, energy, metals, and packaging, while factory gate prices resumed an upward trend after a brief dip in November. Despite these gains, manufacturers’ confidence for 2026 eased from November, citing concerns over costs, taxation, competitiveness, and geopolitical uncertainty.
In contrast, the eurozone’s manufacturing sector experienced a downturn at the end of the year. The final HCOB Eurozone Manufacturing PMI fell to 48.8 in December, its lowest reading since March 2025, reflecting a mild contraction in output and the sharpest fall in new orders in almost a year. Germany and southern eurozone economies such as Italy and Spain saw deteriorating conditions, while France bucked the trend with its strongest expansion since mid-2022. Export demand weakened across the eurozone, supply-chain pressures intensified, and job losses continued, although sentiment for 2026 reached its highest level since early 2022.
Rob Dobson, Director at S&P Global Market Intelligence, said: “Further signs of growth emanated from the UK manufacturing sector before the turn of the year. Output rose for the third successive month and new order intakes improved, albeit slightly, for the first time since September 2024. The domestic market remained a positive spur to growth while new export business, despite having now fallen for almost four consecutive years, took a sizeable stride towards stabilising.
“UK manufacturers benefited from several reduced headwinds towards the end of the year, as the negative impacts of the uncertainty surrounding the Autumn Budget, tariffs and the JLR cyber-attack all moderated.
“The start of 2026 will show if growth can be sustained after these temporary boosts subside. The base of the expansion needs to shift more towards rising demand and away from inventory building and backlog clearance. December’s interest rate cut will hopefully play some part in assisting this transition, encouraging manufacturers and their customers to increase spending and investment. Manufacturers remain uncertain on this score, with business optimism falling for the first time in three months in December.”
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