January’s PMI figures reflect a sector that is seeing light at the end of the tunnel.
The PMI has risen for the fourth consecutive month, suggesting that it is turning a corner.
However, there are still signs that it is weighed down by uncertainty, particularly around the geopolitical arena, which continues to play on manufacturers’ minds.
That uncertainty may already be denting sales, though if the index holds in the low 50s it remains a broadly positive signal for the start of the year.
We saw momentum building towards the end of last year, and there is underlying optimism across the sector. But manufacturers are clear: they need stability and confidence to invest. Rising energy costs and upward pressure on employment bills show no sign of easing, and the incoming Employment Rights Bill risks adding further regulation and red tape at a time when businesses are asking for support, not additional burden.
The labour market has begun to even out, but businesses are not replacing roles that have been cut which could accelerate a longer-term shift toward automation. But automation requires significant investment; you can’t just rip up the factory floor overnight. It’s still a challenging environment for UK manufacturing, and ensuring policy decisions enable growth rather than constrain it will be critical in the months ahead.
