UK Factory Sector Growth At 15-Month High In December

(RTTNews) - The U.K. manufacturing ended the year 2025 on a positive note with the sector expanding at the fastest pace in 15 months on increased production and stronger demand, results of a survey by the S&P Global showed on Friday.

The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers' Index climbed to 50.6 in December from 50.2 in November, its highest level for 15 months, the survey showed.

The final reading, however, was below the earlier flash estimate of 51.2. A reading above 50 suggests growth in the factory sector.

Manufacturing output increased for the third successive month largely due to a build-up of stocks of finished products and efforts to deplete backlogs of work. Consumer, intermediate and investment goods sectors logged output growth, the first-time concurrent growth has been registered since August 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 stabilizing," S&P Global Market Intelligence Director Rob Dobson said.

"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," Dobson added.

New orders increased for the first time since September 2024 amid higher inflows at consumer goods manufacturers and stable demand for intermediate goods. These offset the impact of a slump in demand for investment goods.

Meanwhile, export orders shrunk for the forty-seventh successive month in December. That said, the decline was modest and producers reported signs of recovery in demand from the US, APAC and Middle East regions.

Manufacturing employment dropped for the fourteenth month in a row, but the rate of job loss was the weakest during that sequence of decline. Job losses were mainly due to redundancies, non-replacement of leavers, hiring freezes and efforts to control costs, the survey found.

Backlogs of work shrunk for the fourth month in a row suggesting excess capacity at U.K. factories despite the latest round of job cuts. Input cost inflation accelerated, and output prices rose after a decline in November.

Business confidence about the year ahead outlook eroded for the first time in three months in December from November's nine-month high, as companies remain concerned about high costs, increased taxation, reduced international competitiveness, geopolitical uncertainty and the possible impact of government policy.

"The base of the expansion needs to shift more towards rising demand and away from inventory building and backlog clearance," Dobson said. "December's interest rate cut will hopefully play some part in assisting this transition, encouraging manufacturers and their customers to increase spending and investment."