º£½ÇÊÓƵ manufacturing is experiencing a continued decline in production levels, with the threat of tariffs making a "noticeable impact" on sales for exporters, industry experts have indicated.
The sector has been attempting to cope with persistent inflation and elevated energy costs for nearly three years, as the º£½ÇÊÓƵ economy struggles to rally during the Labour government's tenure, as reported by .
However, recent data indicates that additional strains from increasing taxes and tariff concerns are further burdening manufacturers' capabilities to scale up production. Research from S&P Global has highlighted that the sector has suffered seven consecutive months of reduced output.
The purchasing managers' index (PMI) for º£½ÇÊÓƵ manufacturing demonstrated a slight uptick from March but remained stubbornly below the critical 50-point mark, signifying contraction.
Whilst the US has granted the º£½ÇÊÓƵ and other nations some respite from tariffs, it has maintained stringent levies exceeding 100 per cent on all imports from China.
Manufacturers are anxious that ongoing supply chain disruptions could devastate their operations as confidence plunges to its lowest ebb in more than two years. Additionally, lead times from suppliers have increased for the sixteenth successive month.
Exports have suffered their most significant downturn since the onset of the pandemic, and expectations for purchase-related inflation have reached a height not seen in 28 months, as general costs for raw materials skyrocket.
Rob Dobson, director at S&P Global Market Intelligence, has highlighted that "increased trade uncertainty" is negatively impacting º£½ÇÊÓƵ manufacturing.
"Although domestic demand remains soft, overseas demand is especially weak," Dobson stated.
He further noted that manufacturers surveyed reported that US tariff announcements were significantly affecting global markets as trading partners adjust to heightened trade volatility.
Taxes hit manufacturing
The manufacturing sector across the º£½ÇÊÓƵ is also adapting to tax alterations implemented in April.
Chancellor Rachel Reeves' £25bn tax assault on employers' national insurance contributions (NICs) has compelled manufacturers to balance costs by reducing staff numbers. S&P Global's survey of over 650 firms indicated that redundancies and hiring freezes had been implemented.
Companies have also taken measures to safeguard profit margins as fewer stocks were bought while price growth expectations for their sales reached a 26-month peak.
º£½ÇÊÓƵ manufacturers are keenly awaiting the government's next steps.
Chancellor Rachel Reeves is poised to present a ten-year industrial growth strategy, which businesses hope will offer some guidance for º£½ÇÊÓƵ manufacturing.
The government's spending review could also instil confidence as manufacturers hope investment levels can recover following recent downturns.
