UK manufacturing activity contracted for the eighth consecutive month in May, but the pace of decline slowed slightly, according to the latest S&P Global Purchasing Managers’ Index (PMI). The index rose to 46.4 in May from 45.4 in April, indicating continued sector shrinkage below the neutral 50 threshold.
Firms reported falling output and new business as both domestic and overseas demand remained subdued. New orders declined for the eighth consecutive month, with clients reportedly hesitant to commit to spending amid higher employment-related costs and economic uncertainty.
The rise in the National Living Wage and increased employer National Insurance contributions, introduced in April, have added pressure to margins. The National Living Wage rose by 6.7% to £12.21 per hour, while employer NI contributions increased to 15% for salaries above £5,100.
Manufacturers also pointed to ongoing challenges with tariffs and freight costs, energy price volatility, and extended supplier lead times. Export demand weakened further due to continued global trade uncertainty and pricing pressures.
Despite these challenges, input price inflation eased to a five-month low, and some firms benefited from improved weather-related sales. However, the overall environment remains fragile, with limited signs of a near-term rebound.
